Before the European Council approves the economic recovery plan, some of the differences between member states have been artificially exaggerated and a kind of pleasure obtained by emphasising the rare and controversial aspects rather than the overall direction and collective determination to take effective action. On Thursday, the Council/Parliament/Commission trialogue will provide an update on plan implementation and it has not been ruled out that the Permanent Representatives will discuss one or other of the plan's aspects before Christmas if it proves necessary.
Three aspects contained in the summit's conclusions (our readers received the full draft conclusions last week, as well as the discussions about them) require some comment.
1. Unjustified criticism of Germany. It is easy to criticise the Berlin authorities for excessive timidity with regard to economic recovery, as well as excessive prudence when it comes to encouraging any additional public spending. This, however, ignores the fact that German budgetary stability is essential for the euro's safe keeping. A stable euro benefits everyone. How many countries in the eurozone would be currently experiencing difficulties if they had kept their national currencies? It is easy to forget when Saturdays used to come around traumatically and the majority of member states had to negotiate their currency devaluations in relation to the deutsche mark, as well as the accompanying humiliation, and feeling of powerlessness. Contrary to popular legend, German industry, the German financial community and a section of the country's political class were initially opposed to the creation of the euro, having full confidence in their national currency which they wanted to keep. It is the political class in power that wanted the euro and I will never forget Chancellor Schmidt explaining that he wanted it because he never wanted his country to acquire a dominant position in Europe with the currency replacing the army of the past.
Ms Merkel should certainly take the social and economic requirements of her country into consideration, which cannot assume the entire burden provoked by the behaviour of other countries. The first German recovery plan includes similar and sometimes more resources than the one put forward by the other big member states. This very week Angela Merkel and her ministers began an examination of supplementary measures involving tax and investment. In a few weeks' time, Germany will be at the meeting. The finance minister, however, Peer Steinbruck, has declared that he will not be wasting any money, as some of his colleagues are doing, and has said that he does not intend to saddle future generations with the burden of excessive public debt.
At the same time, some of German industry is throwing down the challenge of the third industrial revolution - that of ecological production, technological innovation and energy saving. Even in the particularly hard hit car sector, Volkswagen has announced avant-garde projects such as bio-fuel production based on domestic waste and wood shavings, and has announced the coming of a car that will have zero impact on the environment.
2. VAT - an instrument for reviving consumer confidence? Lowering VAT to bolster demand is still creating controversy. According to some governments, it will not affect consumer prices and will be of particular benefit with regard to imported products. France believes that extending reduced value added tax rates to other services will be positive, but Germany is still not without its reservations. It is difficult to say whether this dossier is going forward or is on hold. We'll know more about it in the spring.
3. Financing infrastructure from surplus CAP funding. The European Commission has openly called for €5 billion from the common agricultural policy (in the 2008 and 2009 budgets) to be used to finance energy networks between member states and broadband infrastructure. Last week it proposed to amend the financial perspectives in this direction (EUROPE 9801). According to certain member states, the orientation decided on by the European Council is unclear and budgetary experts have pointed out that the qualified majority needed to revise financial perspectives will not be obtained. These experts are continuing their work and a meeting at a Permanent Representative level has not been ruled out for next week.
Two political aspects need to be underlined: CAP costs less than is claimed (the funding that remains unused every year is very high) and the summit's political decisions to use surplus funding for projects of European interest in other areas must be respected. (F.R./transl.rh)