A double presentation by Jean-Claude Juncker on the next European treaty and on the current economic situation of the euro, followed up by questions and answers. What more could one ask for? And that is what happened this morning, at the specialised section of the Economic and Social Committee on “economic and monetary union, economic and social cohesion”, chaired by Georgios Dassis of the Employees group. It is my pleasure to give an immediate account of the moment. Mr Juncker spoke without a written text or notes, quite spontaneously, not forgetting a number of informed axioms The “constitutional” part of his speech was, one might say, improvised, as it did not appear in the programme. One might also say that my signature at the top of the page is quite impertinent as the real author of what follows is the president of the Eurogroup. But who is going to complain?
New Treaty: what has been achieved, what is essential. After meeting the Dutch prime minister, Jan Peter Balkenende, on Wednesday, and after several other contacts and telephone conversations, Mr Juncker took stock of the direction being taken by the new treaty intended to replace the current draft Constitutional Treaty:
a) All member states agree there is a need for a new treaty that it should not be called a constitution. Giving up this term is not a problem as it can be misleading for the public, making one believe there is a project for a superstate of Europe that would have a place over and above national identities.
b) There is no valid solution other than to keep what is essential in the first part of the current draft, in order to give back to the EU its institutional effectiveness and its decision-making ability, not guaranteed by the mongrel-like Treaty of Nice.
c) Mr Juncker expressed his “surprise and disappointment” at noting that some governments claim there is no need for the second part, the Charter on Fundamental Rights. He was firm about this, if not somewhat sarcastic, saying that all day long the EU gives lessons to others that do not uphold individual and collective rights and duties, but refuses to define the same for itself! Does the EU intend to be “better on the outside than on the inside?” In some way or other, the Charter must be present in the new treaty. Mr Juncker rejects the limited idea that, at the end of the day, the EU should be just a free trade area, when it must be a “Community of shared values”.
d) Certain elements of the third part must be safeguarded. Does one really want to give up the legal base of a European energy policy? Or structural improvement of the common area of freedom, security and justice? How then would one combat cross-border crime? Mr Juncker exclaimed: “Those who have understood the border-free area are the bandits, those who have not understood it are the states”. And it would be “improper” not to keep the openings forged in the social field.
The road to follow. Describing himself as neither optimistic nor pessimistic but rather realistic, Mr Juncker said that, on 21 and 22 June, the heads of state and government are expected to leave structural questions to one side in the new treaty as well as the theoretical debates that “do not interest citizens and interest decision-makers very little”, to focus on a list of substantive elements to be retained, that is, on the content of the text. There will then be discussion on how and into what structures these elements would be inserted.
In answer to a question on the arrangements for negotiation, Mr Juncker said he was not in favour of the idea of a new Convention. The experiment of having negotiation in which governments are in the minority, with broad participation by other categories, has already been done, and has failed, as two member states rejected the draft treaty and, after signing it, other governments did not dare submit it for ratification (although they were in fact under a legal obligation to do so). It is better, says Mr Juncker, to return to intergovernmental negotiation, taking all elements into account, and on the understanding that European Parliament involvement in the work must be envisaged.
Favourable economic situation, structural weaknesses. The second part of Jean-Claude Juncker's speech, that which was on the programme, began with an updating of economic prospects, on the basis of the most recent analyses and forecasts. A slowdown in growth was expected in 2007 compared to 2006, due to developments in the United States and the impact of the rise in VAT in Germany. It is now considered that the year in progress will be just as favourable as the previous year, not only for growth but also for reducing for the third year running as member states' budgetary programmes are on the whole positive. At the end of
unemployment. The rise in VAT in Germany has not slowed down domestic demand. Public deficit is falling the year or early next year, no member state will be in a situation of excessive deficit under the Stability Pact.
A favourable economic situation must not, however, slow down reform. By partly making the rules applicable to cases of excessive budgetary deficit, the revised Stability Pact has also strengthened the “preventive chapter”, that is, the economic policy guidelines to be respected in times of growth. Above all else, the availability of additional financial assets must be used to reduce deficits, as in some member states the level of indebtedness is still too high. Mr Juncker pointed out that the president of the Eurogroup (meaning himself) will push for the rules to be respected and for additional receipts to be used in order to reduce the public deficit and to finance structural reform, which is above all essential for coming to grips with the impact of population ageing. There is still much to be done but the image of a static Europe is wrong. Many reforms have already been carried out. They must now be followed through and above all better coordinated between member states.
Criticism against the euro does not hold water. Criticism about the impact of the euro, that can mainly be heard in France, “is not serious”, Mr Juncker said, either when it comes to growth or, still less, when it concerns the creation of jobs. Figures on the number of jobs created since single currency came into being and those on inflation are available to everyone: - they are much better than those for the previous period. The euro's stability has also made it possible to drastically reduce the effects of the surge in oil prices and has freed Europe from the scourge of competitive devaluation. In his capacity as finance minister, Mr Juncker had counted 25 alignments in Community currency exchange rates. Improving a country's currency situation compared to its neighbours is a practice that has now fortunately disappeared. The stability of European single currency even protects the countries that are not part of the eurozone (for example, Sweden and the United Kingdom) and “protects people even though they may not be aware of it”. This last comment was mainly aimed at France after its no-vote on the constitutional draft treaty.
On the whole, the euro is a “real shield against the dangerous elements of globalisation”. One must now reflect in earnest on how to improve the way it is represented outside the EU and strengthen the monetary policy management mechanisms in order to “manage the euro in a collective manner”.
Criteria for joining eurozone cannot be changed. A Lithuanian advisor had asked whether the criteria of inflation could be relaxed given that, in periods of economic “catching up”, during times of very great expansion, the countries of Central and Eastern Europe will necessarily have a rate of inflation above the average - albeit only temporarily.
Mr Juncker stressed that changing the criteria would involve revision of the Treaty, by unanimity, and that just the fact of discussing this could cause a “crisis of credibility” outside the EU with regard to the euro. One must show proof of “maximum circumspection” on this, and reflect on the possible margins of interpretation without touching the texts. Mr Junker nonetheless vigorously challenged the impression that euro countries (or some of them) are hostile to new countries entering the zone. When a member state respects convergence criteria, it has the right to join the eurozone. No country in the zone can object to this, or want it. With the birth of the euro, it was expected that five or six countries would take part - there were in fact far more and today there are 13 in all.
Relations between currency, economic coordination and political unity. Mr Juncker did not entirely support the idea put forward by certain German circles that single currency cannot be lasting without political unity. The link which he believes is inevitable is that between the currency and coordination of economic policies. If this stage is not reached, the management and stability of the euro would be affected entailing a serious risk of losing credibility. History, on the other hand, proves that total political unity is not strictly essential, but that a strong political will is needed.
Furthermore, Mr Juncker does not believe the euro is currently too strong, but that it was too weak earlier on. Nonetheless, beyond a certain level, there may be a problem when it comes to exports.
Distributing the fruits of growth more evenly. Mr Juncker clarified the concept of “salary moderation”: this does not mean that increases in salary are to be proscribed but that they must be in relation to improved productivity. Otherwise, there is inflation, which is detrimental to us. But if productivity improves, then salary increases are a “natural adjustment”.
In response to a question from an Italian trade unionist, Mr Juncker went much further. He asserted that there must be an end to this “stupidity” of having exaggerated earnings for managers or shareholders. When “there is an explosion in the profits of large companies, they are sometimes distributed without embarrassment and without limit”. We must be careful of this kind of aberration, and reflect on other ways to distribute profits (worker participation and others). We must find the “right measure and balance as some kinds of behaviour are a permanent source of trouble” and threaten the peace of our society. (F.R.)