Economic governance talks reach final stages
Commission presents proposals for reform, but concern remains about level of detail in the plans.
The European Commission and the EU’s finance ministers this week moved into the closing stages of negotiations over policing the management of public finances. They have two weeks to resolve disagreements over proposals to reform the EU’s economic governance that were presented yesterday (29 September) by the Commission.
A ministerial taskforce chaired by Herman Van Rompuy, the president of the European Council, is supposed to broker agreements on reform of economic governance before an EU summit on 28-29 October. José Manuel Barroso, the president of the Commission, yesterday put forward proposals aimed at galvanising the work of that taskforce.
The Commission proposals include a regime of graduated financial sanctions that would apply against eurozone countries that have excessively high debt or deficit levels, or which are pursuing irresponsible economic policies. Sanctions would be proposed by the Commission, and would apply automatically unless the Council of Ministers voted by a qualified majority to reject them.
Diplomats, however, fear that the Commission’s proposals will serve in some cases to exacerbate splits between member states over governance reform, because their level of detail goes far beyond what the taskforce has managed to agree so far.
National differences
Christine Lagarde, France’s finance minister, said earlier this week that requiring a weighted majority to reject sanctions was too high, as it would leave the sanctions regime “totally in the hands of experts”.
Angela Merkel, Germany’s chancellor, told the German parliament yesterday, however, that she was “in favour of the highest degree of automation”.
“We want to depoliticise the process,” she said.
Jan Kees De Jager, the Dutch finance minister, said yesterday that he favoured “automatic” sanctions “with real enforcement”.
“This is how we show markets and citizens that we really mean business,” he said.
The national governments are also split on the Commission’s proposal to apply financial sanctions to member states on grounds of their competitiveness.
“These proposals may not be popular with all member states,” Barroso conceded. He said, however, that they were were essential “to make sure citizens are not paying taxes today for little or no return tomorrow” – a reference to the consequences of high debt and deficit levels.
Penalties
The Commission’s proposals envisage that member states would be penalised first by having to place an interest-bearing deposit with the Commission. This would be turned into a non-interest- bearing deposit, and ultimately a fine, if a country failed to change its ways.
Olli Rehn, the European commissioner for economic and monetary affairs, said his services were still working on a proposal, to be presented “very soon”, to suspend EU funding from member states with poor public finances.
Several countries, including Spain, Portugal and Greece, have said that they are unhappy with this idea, although they indicated at a taskforce meeting on Monday (27 September) that they could accept it.
He said that, unlike the proposals made yesterday, the withdrawal of EU funds could also apply to non-eurozone countries.
The ministerial taskforce, which is largely made up of the EU’s finance ministers, will meet again on 15 October, although the Commission’s proposals will also be discussed at a finance ministers’ meeting taking place today (30 September).
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