Notes on the Euro Plus Pact and where to look and either read or glance,
or just zap away.
The Select Committee on the European Union
Inquiry on
EUROPEAN COUNCILS OF 4 FEBRUARY, 11 MARCH AND 24-25 MARCH 2011
Page 10 from the
Lord Hannay of Chiswick: Following up that point, could you tell us whether the decision not to join the Euro-Plus pact is purely a political decision? I do not mean purely politically motivated; I mean is it a political and not a legal decision, or is it a legal decision? If, therefore, this Government or a future Government were to decide that it was in our interests to join the euro plus pact, would that be reversible simply by a political decision or would it require negotiation of a legal text? If that decision by a British Government were taken to join the Euro Plus pact, would that attract a referendum under the European Union?
David Lidington MP: I can see that Lord Hannay is getting his referendum campaign badge ready. I can give him reassurance. It is a political decision. The euro plus pact is an
expression of political commitment by those nations that have chosen to participate in it. This, or any future United Kingdom Government could decide to change policy and take part in the pact without the need for a referendum, or indeed legislation.
http://www.parliament.uk/documents/lords-committees/eu-select/Transcripts/cEUS040511ev1.pdf
Notes on the Euro Plus Pact and where to look and either read or glance, or just zap away.
The Select Committee on the European Union
Inquiry on
EUROPEAN COUNCILS OF 4 FEBRUARY, 11 MARCH AND 24-25 MARCH 2011
Page 10 from the
Lord Hannay of Chiswick: Following up that point, could you tell us whether the decision not to join the Euro-Plus pact is purely a political decision? I do not mean purely politically motivated; I mean is it a political and not a legal decision, or is it a legal decision? If, therefore, this Government or a future Government were to decide that it was in our interests to join the euro plus pact, would that be reversible simply by a political decision or would it require negotiation of a legal text? If that decision by a British Government were taken to join the Euro Plus pact, would that attract a referendum under the European Union?
David Lidington MP: I can see that Lord Hannay is getting his referendum campaign badge ready. I can give him reassurance. It is a political decision. The euro plus pact is an
expression of political commitment by those nations that have chosen to participate in it. This, or any future United Kingdom Government could decide to change policy and take part in the pact without the need for a referendum, or indeed legislation.
http://www.parliament.uk/documents/lords-committees/eu-select/Transcripts/cEUS040511ev1.pdf
I think you may find there is a tad more to the Euro Plus Pact than David Lidington gives here, and I would suggest if there is not a great requirement for a referendum before this is entered into, our Governments have already given the Governing of our Country away and there will be no need of any of them for our Government would be in Brussels.
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José Manuel Durão Barroso
President of the European Commission
Statement by President Barroso at the press conference following the European Council Brussels, 25 March 2011
This morning our discussion focused on Japan and more generally, nuclear safety.
We express our solidarity with the Japanese people who are dealing with this crisis with great courage and dignity.
The European Union is doing all it can to help. In the last days we have responded to Japan's call specific in-kind assistance to bring relief to the Japanese people.
It is important to say that radiation levels in Europe have not changed, but of course we are following these issues with great care.
The terrible events in Japan remind us that while we have very different views and situations in the EU regarding nuclear energy, we must be united on the issue of nuclear safety. We need to ensure that the highest nuclear safety standards are respected. The Commission has called for a comprehensive safety and risk assessment to be done at all nuclear power plants in Europe and neighbouring countries. These must be done on the basis of clear, common and transparent criteria. This has been fully endorsed today
The Commission will work with the European Nuclear Safety Regulatory Group and all other relevant bodies and authorities in developing the modalities of these safety assessments. I believe the role of the Commission is essential to ensure the credibility of this exercise working of course hand in hand with the independent national regulators. The European Council will assess initial findings by the end of 2011 on the basis of a report by the Commission. We are also calling on Member States to implement the new Directive on nuclear safety in full, and to adopt rapidly the Commission proposal on nuclear waste.
We also need to strengthen international standards and we will make concrete proposals in the upcoming review of the global convention on nuclear safety. We have also decided to put this very high in our priorities when dealing with third countries, namely our neighbours.
I would like to highlight the very important, I would say historic, conclusions of this European Council regarding economic policy and economic governance.
Today we have endorsed very important conclusions on economic governance and I believe this can be a major change. We have reinforced our monetary union with an economic union.
I think we can say that the economic and monetary union will finally stand on both legs.
In concrete terms, we have agreed a course of action with clear priorities for economic policy, where Member States take clear commitments to strengthen fiscal discipline, financial stability, competitiveness, employment and growth, which are agreed by all. And this will be topped-up with a Pact for the Euro or a Euro plus pact for the seventeen members of the euro area, but also the member states that are going to join in the first phase - Poland, Bulgaria, Denmark, Romania, Lithuania and Latvia.
On the basis of the Commission's Annual Growth Survey, the European semester of ex-ante coordination of budgetary and economic policy is well underway. The ball is now firmly in the court of the Member States. It is now up to them to present ambitious national reform programmes implementing the Europe 2020 goals by the end of April. This requires real ownership and drive from within each Member State. I want to underline this point, because as you know this point was very often discussed regarding the post-Lisbon strategy. The need of the real ownership by our Member States in terms of national reform programs and what they can do to achieve goals that have been commonly agreed. This point was also highlighted in the conclusions. We will be vey objective but at the same time firm in the analysis of Member States' commitments and we will of course work carefully on the recommendations we will make.
And we also have agreed an effective backstop mechanism (ESM) to guarantee the stability of the euro area. The "operational features" of the permanent Stability Mechanism were confirmed; in particular it will have the capacity to provide assistance of up to 500 billion euro. In the unlikely event we need it, we have the real firepower in place. I am confident this will not be the case because of the new governance system we are now putting in place.
The reinforced surveillance system is based on our six-pack of proposals made on 29 September. The European Parliament will set its position in April. Then negotiations can focus on reaching a final deal in June. The end-result can only be stronger and I think now we are really very close to finalise all this architecture of stronger economic governance, not only for the euro area, but indeed for the European Union.
This is a very good result for Europe, a result that reinforces the community approach. I was also pleased during today's discussion to see the strong support for our efforts to stimulate growth with deepening of the single market. We will present in April the Single Market Act with a key set of 12 priority proposals. There was today a clear commitment of all Member States to reinforce the actions through the deepening of the single market so that we can boost growth and jobs in the European Union.
So, all in all very successful European Council.
http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/11/216
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EUROPEAN COUNCIL, 24/25 MARCH 2011 CONCLUSIONS
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/120296.pdf
This starts on page 13.
THE EURO PLUS PACT. STRONGER ECONOMIC POLICY COORDINATION FOR COMPETITIVENESS AND CONVERGENCE.
This Pact has been agreed by the euro area Heads of State or government and joined by Bulgaria, Denmark, Latvia, Lithuania, Poland, Romania to strengthen the economic pillar of the monetary union, achieve a new quality of economic policy coordination, improve competitiveness, thereby leading to a higher degree of convergence. This Pact focuses primarily on areas that fall under national competence and are key for increasing competitiveness and avoiding harmful imbalances.
Competitiveness is essential to help the EU grow faster and more sustainably in the medium and long term, to produce higher levels of income for citizens, and to preserve our social models. Other Member States are invited to participate on a voluntary basis.
The rest of this is on, The EUROPEAN COUNCIL 24/25 MARCH 2011 CONCLUSIONS, Brussels, 20 April 2011 starting on page 13. ANNEX 1
(You might also find ANNEX II of interest!)
From page 20, here for you. In addition to the issues mentioned above, attention will be paid to tax policy coordination.
Direct taxation remains a national competence. Pragmatic coordination of tax policies is a necessary element of a stronger economic policy coordination in the euro area to support fiscal consolidation and economic growth. In this context, Member States commit to engage in structured discussions on
tax policy issues, notably to ensure the exchange of best practices, avoidance of harmful practices and proposals to fight against fraud and tax evasion.
Developing a common corporate tax base could be a revenue neutral way forward to ensure consistency among national tax systems while respecting national tax strategies, and to contribute to fiscal sustainability and the competitiveness of European businesses.
The Commission has presented a legislative proposal on a common consolidated corporate tax base.
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Worth perhaps a slight glance from TUESDAY 6 JULY 2010 interviewing Witnesses: Baron Franciskus van Daele, Head of Cabinet, and Dr Richard Corbett,
http://www.publications.parliament.uk/pa/ld201011/ldselect/ldeucom/999/ceus060710ev1a.pdf
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A letter dated 25th May 2011 with explanation re Euro Plus Pact on page 6. http://www.parliament.uk/documents/lords-committees/eu-sub-com-a/EconomicGovernance/20110525%20Hoban%20Response%20to%20EU%20Goverance%20report.pdf
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Parliamentary Questions
28 Mar 2011 : Column 50
Chris Heaton-Harris (Daventry) (Con): The euro-plus pact, which was endorsed by the European Council and which I am pleased the UK has not joined, referred to a recently proposed directive on corporation tax, which would apply to the UK if it was adopted. Would the Prime Minister be prepared to veto that directive if it interfered with our tax sovereignty?
The Prime Minister: It is important that we maintain our tax sovereignty. That is one reason why I think it is right to stay out of the euro-plus pact. One of the terms of the euro-plus pact is to look at developing a common corporate tax base. If eurozone countries want to equalise their tax rates, that is a matter for them, but it is a folly in which I do not think we should engage.
Bob Blackman (Harrow East) (Con): I congratulate the Prime Minister on extricating us from the eurozone bail-out mechanism by 2013. Given that Portugal, Spain and Greece are in financial trouble, most people will be concerned about what contingent liabilities we will be exposed to between now and then. What has my right hon. Friend done to assess those potential liabilities?
The Prime Minister: We have assessed the liabilities. Debates have been held in this House and there is a great deal of information that I can make available to my hon. Friend. The matter is complicated because as well as the article 122 mechanism, which contains a limited amount of headroom, some of which has already been used up in the case of Ireland, another facility has been put in place that does not include the UK, which has considerably more headroom. Above and beyond that, we will have the future mechanism post-2013. If he likes, I can give him the full details on what all those things are and on the relatively limited liability that the UK has under article 122. As I have said, it is a liability that we wish we did not have.
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The Future of Economic Governance in the EU Volume I March 2011.
http://www.publications.parliament.uk/pa/ld201011/ldselect/ldeucom/124/124.pdf
The Future of Economic Governance in the EU March 2011 Volume II
http://www.publications.parliament.uk/pa/ld201011/ldselect/ldeucom/124/124ii.pdf
Short Debate in the House of Lords, “EUC Report: Economic Governance” Well worth a read-one page only.
http://services.parliament.uk/hansard/Lords/bydate/20110616/mainchamberdebates/part009.html
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To finish up with, I will put in a few comments from the EU Parliament .
Tuesday, 5 April 2011 - Strasbourg
Herman Van Rompuy, President of the European Council. − Mr President, President of the European Commission, honourable Members, within the space of 49 days, I have chaired 3 meetings of the European Council and a Summit of Heads of State and Government of the eurozone. These facts illustrate the great and urgent challenges our Union is facing, both on the economic and on the diplomatic front. It also neatly illustrates that meetings of the European Council are not just an event: they are part of a process. Indeed, in the meeting on which I am reporting today – that of 24 and 25 March – we duly approved a significant set of economic measures that have been prepared and discussed over the last year, we stepped up our action with regard to ongoing events in Libya and we initiated our response to the catastrophic events in Japan. Allow me to take each of those issues in turn.
On economic issues, we took forward a comprehensive package of measures. Under the impulse of earlier meetings, including the informal eurozone summit of 11 March, we were able to bring together almost all the strengths of this endeavour. Of course, approving measures and procedures to deal with the crisis does not in itself take you immediately out of the crisis. This will require perseverance and sustained effort. I will not repeat all the decisions we took in detail. You will find them in the conclusions. However, let me summarise six key points.
Number one: we agreed on the Treaty amendment needed to give full legal certainty to the permanent Stability Mechanism. In its resolution of 15 December, Parliament called for a light Treaty change that provides a legal basis for such a mechanism, rather than resorting to a profound amendment of the Treaty. We followed that advice, and I was delighted when Parliament endorsed the proposed Treaty amendment by such an overwhelming majority on 23 March. I am especially glad that we were able to reassure Parliament about some of the concerns that had been raised in this context. I would like to thank the rapporteurs, Mr Brok and Mr Gualtieri, for working so closely with me to achieve this result.
Number two: we reached a detailed agreement on the size, scope and mode of operation for the future Stability Mechanism and on improving the temporary facility.
Number three: we endorsed the position of the Council on the six legislative proposals on budgetary and macroeconomic surveillance ahead of negotiations with Parliament. I know you are working hard on this; indeed, I met your rapporteurs and will be meeting your coordinators this afternoon. All those concerned understand the need to conclude by June.
Number four: we started the European Semester. It is an exercise in which we follow up the implementation of the EU 2020 strategy, the Stability and Growth Pact and macroeconomic surveillance. The European Council in June will draw the necessary conclusions. I will personally see to it that this does not sink into the sands of a bureaucratic process.
Number five: we agreed that credible stress tests for the banks will take place soon. The task is double: the banks must do the test and governments must be ready to deal with the outcome of the tests.
Number six: we provided for a new quality of economic coordination. We call it the Euro Plus Pact for two reasons: firstly because it is about what eurozone countries want to do more – they share one currency and wish to undertake supplementary efforts on top of existing EU commitments and arrangements; and secondly because it is also open to the others. That is why I am glad that six non-euro countries have already announced that they will join the Pact. They are Denmark, Poland, Latvia, Lithuania, Bulgaria and Romania. It remains open for any of the four remaining Member States to join later on.
Let me say once again that the political commitment of the Euro Plus Pact comes on top of all the other measures in the package to improve Member States’ economic performance: the stronger Stability and Growth Pact on fiscal surveillance, the new macroeconomic surveillance and implementation of the crucial EU 2020 strategy on structural reforms to achieve economic growth. The commitments in terms of competitiveness, public finances and pensions, employment and so on must be translated into the national reform and stability programmes. They will also be evaluated annually at the highest level.
I have a final remark on the economy. Some people fear this work is about dismantling the welfare states and social protection. Not at all. As I said to the social partners at the Tripartite Social Summit, it is to save these fundamental aspects of the European model. We want to make sure that our economies are competitive enough to create jobs and to sustain the welfare of all our citizens and that is what our work is about. These, then, were the main elements of our global economic package to help us come out of the crisis. As I said, they are the result of a long process, not a single meeting.
It was on 25 March 2010 that the European Council decided to improve European economic governance, launching the Task Force that I had the honour to chair. One year later, we are getting new rules, new instruments and more ambitious policies. It was, and remains, an effort of all institutions, including this Parliament and all the Member States. It was not always easy, not always without drama, but the political will has been unflinching, our sense of direction is clear and significant results are there.
Not all our problems are over. They are the result of past mistakes and a lack of appropriate instruments both at the European and at the national level. But we now have every chance of dealing with them and not repeating them.
I should now like to turn to the situation in Libya, which was, of course, something we discussed on 24 and 25 March. We showed common determination. I know that some among you had doubts, but we worked hard to secure concrete results. Two weeks previously, at an extraordinary meeting of the European Council on 11 March, we had adopted a clear line on Libya. Without that clear European position, the subsequent actions would not have been possible. We decided that, to safeguard the safety of the civilian population, Member States could examine all necessary options, provided that there is a demonstrable need, a clear legal basis and support from the region.
Those three conditions were quickly met. The clear need was obvious when the regime stepped up the violence against its own people. The legal base was provided when the UN Security Council agreed the landmark resolution on Libya a few days after the European Council meeting. Regional support was immediately forthcoming from the Arab League.
The actions undertaken by a coalition of European, Arab and North American countries implementing the UN resolution have helped protect the civilian population of Libya. A massive bloodbath has been avoided. Thousands of lives have been saved. This is the most important result and deserves the highest attention, more so than the decision-making process. The wood is more important than the trees.
We all know that the decision to take military action was not easy. There are, quite naturally, questions and hesitations. That is perfectly normal in issues of war and peace. But any difficulties that we have experienced over that aspect of the Libyan crisis should not mask for one moment the full track record of the European Union. From the beginning of the crisis, the European Union was at the forefront. It was the first to impose sanctions, the first to impose a travel ban on leading figures in the regime, the first to freeze Libyan assets and the first to recognise the Interim Transitional National Council as a valid interlocutor, at the request of this Parliament. The Union also coordinated rescue efforts for EU citizens and has provided, and continues to provide, substantial humanitarian aid.
The political objectives we set on 11 March remain unchanged. Gaddafi must go. We want a political transition led by the Libyans themselves and based on broad-based political dialogue. We stand ready to help a new Libya, both economically and in building its new institutions.
We are also following the events in the rest of the region closely. Knowing that the situation is different in each country, we express our utmost concern at the situation in Syria, Yemen and Bahrain. We strongly condemn the escalation of violence and we support political and social reforms in our southern neighbourhood. We also have to change our policy, and I will be discussing this later today with several MEPs responsible for this region within Parliament’s Committee on Foreign Affairs. On the positive side, we noted the smooth conduct of the constitutional referendum in Egypt two weeks ago.
Allow me to say a few words on Côte d’Ivoire as well. It was not on the agenda of the most recent European Council, but we adopted conclusions in December and have been closely following developments there ever since. First of all, we condemn the violence, particularly violence against civilians, in the strongest possible terms. This must stop on all sides. Secondly, the current situation is a clear result of the lack of respect for democracy. Democracy is not only about elections, but also respect for the outcome of the elections. The international community was clear about the results of the presidential elections in Côte d’Ivoire last year. We must be consistent in our position.
Finally, on Japan, turning to the accumulation of tragedies that had hit Japan, we as the European Council expressed our sympathy and solidarity for the Japanese people and our condolences for the thousands of victims. We must not forget them, even while other aspects of the drama in Japan are retaining our attention. We are ready as a Union to assist in any way we can. In these tragic days, as true friends of Japan, we reiterate the strategic importance of the EU-Japan relationship. As we know, the effects of the events go beyond Japan, and that is why the European Union is drawing all the lessons fully. We are paying close attention to the consequences for the global economy and to the nuclear aspects. That is a top priority.
We therefore decided that the safety of all of our nuclear plants should be urgently reviewed in the ‘stress tests’ on safety. The Commission will report to the European Council on the stress tests before the end of the year. It will review existing EU rules on the safety of nuclear installations and propose improvements wherever necessary. In Europe, we want the highest standard for nuclear safety, because ensuring the safety of nuclear plants cannot stop at our borders. We encourage and support neighbouring countries to do similar stress tests. A worldwide review of nuclear plants would be best.
Mr President, honourable Members, that concludes my summary of what we agreed at this, the third meeting of the European Council this year. Much of it paves the way for further work in this Parliament, be it through legislative procedures or through Parliament’s general right of scrutiny over the common foreign and security policy. I look forward to hearing your views.
Guy Verhofstadt, on behalf of the ALDE Group. – Mr President, first of all I would like to thank Mr Van Rompuy for this report on the Council, but let us be honest, I do not think that the crisis is over, and I do not believe that, with the measures we are taking now, it can be over. There is a heavy thunderstorm on our doorstep.
What we have done in the European Union so far is to use stop-gaps: measures which may be necessary but are not in fact solving the crisis. We have given EUR 110 billion to Greece and EUR 67 billion to Ireland, and I am not including the EUR 24 billion for the Irish banks that we have just decided to provide. For the moment we have EUR 76 billion in government bonds which the ECB has purchased. I can tell you that it will continue to do that, because the emergency fund is not allowed to go on the secondary markets. This means that it will continue to do so. On top of that, the ECB has accepted EUR 100 billion of collateral to give liquidity to the banks in Europe. In total, that is EUR 400 billion that we have invested in this crisis in recent months. That is three times the budget of the European Union! And the worst is still to come. On Thursday there will probably be an increase in interest rates in Europe –from 1% to 1.25% – which may worsen the situation. It is necessary to combat inflation, but on the other hand this is making the situation worse.
So that is the situation: EUR 400 billion that we have invested. And have we solved the crisis? No, we have not solved the crisis. What is necessary is a really bold and in-depth approach and we do not have that for the moment. In this regard I would like to quote Nout Wellink, the President of the Dutch national bank, who published his annual report a few days ago. He says three things about the outcome of our decisions and those of the Council in recent weeks. He says that the budget rules are not tight enough, the economic governance package is too little and the pact for the euro is in fact too weak because there is no mechanism to enforce it. I am not the one saying this, I am quoting Nout Wellink, President of the Dutch national bank, who is repeating exactly what Mr Trichet said last week. The third thing he mentioned is that financial supervision is being conducted on too national a basis.
I think Nout Wellink is right. We can even add a number of other elements. The first is the EFSF and the ESM. The permanent and temporary rescue funds cannot work because they have a unanimity rule. If we keep this rule, it means that the entire eurozone will from now on be hijacked by eurosceptic governments and by eurosceptic political parties.
Finally – and this is my message for today – we still have to clean up the European banks. The problem has not been solved and the economic recovery in Europe will not start if we do not first of all deal with that problem. Not only do they have the old products from the financial crisis still in their portfolios, but they now also have a number of bonds in their portfolios from problematic countries whose ratings are going down every day and at least every week.
What I am asking is that Mr Barroso and Mr Trichet come forward as quickly as possible with a global response on that issue, namely a bolder Stability Pact – and Parliament is working on that – and economic governance. Is there real economic governance? What we have now is an intergovernmental approach without a sanction mechanism and that will not work. It has not worked in the past and it will not work in the future. We must come forward with a proposal to abolish the unanimity rule in the rescue funds, because it cannot work. We are in fact giving all the power to the countries and the parties who are against the system.
Finally, we have to come forward with a plan for the European banking sector. We will not have economic recovery before you have put on the table a European mechanism to clean up the banks. We all know that will take money. Recapitalise the European banks, finance investment in Europe – as has been requested by Mr Schulz – and at the same time cover the bad public finances of a number of our Member States. How will we do that? Where is the money? The only way to find the money is to create a real European bond market, and we know it. Creating a European bond market is the only way out of the crisis.
I would like to say to Mr Barroso that now is the time for him to deliver. Time is running out and it is not only with a pact for the euro that we will solve the problems.
Martin Callanan (ECR). - Madam President, every time the EU is confronted with a specific problem, it falls into the trap of devising a complex, bureaucratic, heavy-handed solution which is often completely disproportionate to the severity of the issue. This is the mistake that we are now making with regard to the current financial crisis: it is serious, it does require action, but many of the proposed solutions will have far-reaching and, in my view, highly damaging effects for the long-term future of Europe.
The opportunity is being seized on by many to launch plans for permanent economic governance, with intervention and control as its guiding principles. The solution, we are told, is firstly to abuse the existing rules such as Article 122 of the Treaty, which was never intended for the bailouts that it has been used to pay for – my hope is that some country will have the courage to challenge this in the European Courts – and to impose more limitations on our Member States, which in reality means constraining the democratic choice of many of the electorates.
If you look at the case of Ireland, that country has tried its very best to stabilise its banking system – stabilisation, incidentally, which is desperately needed by banks and institutions in other Member States, which would otherwise be terribly exposed – and Ireland’s reward for that is to face demands from other Member States to increase its own rates of corporation tax in order to compete with the bloated situations in other countries. It is unjust and it is undemocratic.
Proinsias De Rossa (S&D). - Madam President, I have to ask some frank questions of the European Quartet – the Troika plus the Council. Are you serious about saving the eurozone and the European project?
The bank stress tests have just concluded, based on the most pessimistic scenarios in Ireland. The new Irish Government has drawn a line under the Irish banking debacle. It has, to everyone’s surprise in Ireland, decided that there will be no haircuts for senior bond holders in the Allied Irish Bank and the Bank of Ireland.
But what is the European quid pro quo? Why is the European Central Bank silent on essential medium-term funding for Irish banks? Why are President Sarkozy and Chancellor Merkel insisting on the destruction of the Irish industrial base in return for a cut in the bail-out interest rate? Why are some Member States blocking progress on the European financial transaction tax and the eurobonds? Why is the European budget being cut?
The short answer is short-term electoral calculations and doctrinaire economics. The Irish economic crisis is an integral part of the European crisis. The failure of the Irish economy would not only be a failure for Europe, but would be a failure of Europe.
Debt sustainability for Ireland is critical for Ireland and Europe and the Quartet must get real on this issue. What we need from the Quartet now is imagination and vision in its ongoing negotiations with Ireland.
I want you to mark my words. Ireland is a democracy, just like France, just like Germany, just like Finland: we govern at the will of the people. Ireland’s electorate has accepted severe austerity through gritted teeth and seething anger. They need to see fair play in Europe, otherwise quite soon the window of tolerance currently opened to the Irish Government will shut with a bang.
Paul Murphy (GUE/NGL). - Mr President, on 19 January, in answer to Joe Higgins, Mr Barroso declared here in this Chamber that Europe is trying to support Ireland. With the abject capitulation of the new Fine Gael/Labour Government to the interests of the bondholders, it is clear that it is not the Council or the Commission that are doing the supporting, but it is the working class in Ireland and in Europe, which is being forced to support European banks and speculators through paying for their losses.
The proposals for economic governance represent an attempt to entrench cutbacks and wage cuts. The scoreboard on austerity, and the proposals for fines of hundreds of millions of euro, are designed to ensure that, regardless of mass opposition, working people pay for the crisis. This European shock doctrine will be facilitated by a change to the Treaties, on which the establishment in Europe and Ireland are determined to avoid a referendum. The Socialist Party and the Left in Ireland will demand a referendum on this proposal for permanent austerity.
John Bufton (EFD). - Madam President, the Council deems centralised regulation of national budgetary agendas essential to aid economic recovery – in particular, the proposal of multiannual consolidation plans addressing deficit, revenue and expenditure targets to be reached within stipulated time-frames with associated penalties if obligations are not met.
The UK deficit is largely structural and must be addressed internally. I greatly oppose any involvement from Brussels in my country’s affairs, considering the mess made in Greece and Ireland, which are likely to need further bail-outs. Portugal would rather turn to Brazil, suggesting Lisbon’s reluctance to become an economic protectorate with austerity measures that stifle growth.
The Council states consolidation should be frontloaded in Member States with large deficits. What would stop migration of citizens to stronger economies in the Union under laws of the EU’s own creation?
The Council suggests reducing the regulatory burden. Does this encompass legislation for which Europe has been the architect for decades, such as the Working Time Directive and extended maternity pay?
Decentralised and less-stifled markets are vital for economic welfare, not punitive regulatory measures.
Mairead McGuinness (PPE). - Madam President, there is much to commend the Council conclusions as we look to the future – perhaps less so when we deal with the present and the past.
I was interested in the comments made by Catherine Day, a senior Commission official, in Ireland last week when she said that the shine had gone off Ireland. I hope that does not mean each of us individually, and I hope that, given the results of the stress tests and the very strong action of the new government, the shine will come back to Ireland. I hope, too, that it comes back to our people, who are very depressed and disillusioned by a feeling that they carry a very heavy burden for the rest of the European Union.
I would ask those who wag their fingers in anger about incorrect behaviour by individual countries and citizens to please remember that there were others who also joined in at the party – I speak of European banks, who tried to profit from the boom that existed not just in Ireland, but elsewhere.
However, there is a ray of hope in the Irish media this morning. I see that global finance giants are backing our economy in the wake of the stress tests, and I hope that they realise that the Irish have fixed a problem for the rest of Europe, and will show us much-needed solidarity on interest rates.
Andrew Henry William Brons (NI). - Madam President, paragraph 5 of the report from the meeting says that policy measures will be presented to correct harmful and persistent macroeconomic imbalances and improve competitiveness, but in the introduction the talk is of promoting trade with third countries.
Imports from third countries, particularly the so-called emergent economies, are the greatest single cause of trade imbalances and the inability to compete. It would be impossible for developed economies to compete with manufactured imports from these countries without driving our wages down to their levels.
Indeed, this is hinted at in the section on page 16, on fostering competitiveness. It says ‘there will be assessments of wage and productivity developments and competitive adjustment needs’. Whatever does this mean?
It could only mean one thing. Wages must be adjusted downwards to make goods competitive with those of the emergent economies. While principles such as free trade are sacrosanct, the economic interests of European workers, it seems, are dispensable.
José Manuel Barroso, Président de la Commission. financial transaction tax, I have already defended, in word and in deed, the financial transaction tax in the G20 on behalf of the European Union. This was rejected by a huge number of our G20 partners.
The question that we are now discussing is whether, at European level, we can – or we should – have a financial transaction tax or not. Let us be honest, once again. Several Member States fundamentally oppose it. They will not agree. What I said at the last European Council was that the Commission is now making impact assessments of different options for the financial sector and will soon come forward with proposals. It was very important that the Commission made that announcement to the European Council because at least in the conclusions of the European Council there is a commitment to look at the proposals that the Commission will put forward for financial taxation. I believe that, in terms of justice, it is important that the financial sector – and to a large extent at least some of the behaviour in the financial sector was at the origin of this crisis – also contributes to the response to the crisis. I think this is basic in terms of fairness. That is my own position and, I have no doubt, the position of the Commission. I will come forward with proposals on this matter.
The same goes for the CCCTB. There is some opposition in some quarters in the Council, but the Commission has put forward the proposal and we will fight for it because we believe the CCCTB is important for the completion of the single market. This is exactly the approach we are defending.
We have been discussing process and instruments for a very long time. Now is the time to put process and instruments at the service of the substance. Process and instruments are important, but they are at the service of the substance and cannot substitute for it. The challenge we need to resolve is our economic renewal. The truth is that, in order to be able to invest, we need confidence. Confidence depends on our capacity to modernise, to innovate and to become more sustainable and more competitive. Let us not confuse cause and effect. Investment will be attracted if we implement Europe 2020 quickly and decisively, and if we pursue our goals of a Europe that is sustainable and competitive in the spirit of solidarity and also in solidarity with all the Member States, including Portugal.
House of Commons Euro Plus Pact
http://www.parliament.uk/documents/lords-committees/eu-select/Transcripts/uEUS040511ev1.pdf
European Council
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/120296.pdf
he euro plus pact – a plus but not a solution
28/03/2011 By Andrew Watt 2 Comments
It is often the case with policy and analytical documents produced by international bodies that the most important things are to be found in the annexes. In the specific case of the conclusions of the European Council of 23/24 March 2011, there are two long annexes. And you can pretty much dispense with the rest.
The first sets out the Euro plus pact, the ‘final version’ of the euro pact and the distant descendent of the infamous Franco-German competitiveness pact. (The ‘plus’ comes from the fact that the new pact has also been signed by five Central and East European countries plus Denmark). The second describes the technicalities of the European Stability Mechanism (ESM). This will be, from 2013, the successor to the European Financial Stability Facility. In more common parlance it is the bail-out fund for hard-up EMU member states.
The symmetry of these two annexes also sums up the nature of the deal – which some are touting as a Grand Bargain – that has been done. The essence of the deal is the promise to provide effective and timely financial support to EMU countries in future need – and thus the demise of the no-bail-out principle that was a cornerstone of the Maastricht economic governance architecture – in exchange for greater European integration of economic policymaking. At this high level of abstraction it is a good deal and will come to be seen as a milestone in the history of European integration. Whatever its shortcomings – and there are many – it is important not to lose sight of this fundamental point.
At the same time, it is vital to recognize that the Pact does not chart a path out of the crisis. In particular there is no strategy for achieving faster growth through higher (public and private) investment. On the contrary, the combination of fiscal austerity and supply side reforms will delay the pick up of growth and keep unemployment unacceptably high for the foreseeable future. Nor does the Pact hold out the promise of near-term resolution of the on-going banking crisis, an essential precondition for recovery.
To that extent the Pact is a missed opportunity. Still it can also be evaluated on the more limited terms of a small deal, rather than a grand bargain.
Let us start with the genuinely positive elements. The ESM is what Europe and particularly the EMU members need in the medium run. It is a belated victory for all those concerned in part years about the viability of a monetary union lacking a large central budget, extremely limited transfer mechanisms and a no bail-out clause. The existence of such a fund, with an intervention capacity of close to half a trillion euro, makes its eventual usage less likely, as it will deter speculation. It is essentially an IMF for the euro area. It will lend money to countries in need and can also buy their bonds directly. Provision of support will be subject to conditionality agreed by all the other member states. This is fine in principle: what comes out in practice will depend not least on the political balance of power at the time that help is requested. The perverse measures imposed on Greece and Ireland are not encouraging precedents. But there is such a thing as a learning curve. The price of the loans – the surcharge on the interest rates that the ESM itself pays on its borrowing – has already been set out: at 2 percentage points for short-term and 3 p.p. for loans above three years that is too high. (Why punish a country further that is committing to an agreed and doubtless painful consolidation package and make the consolidation that much more difficult?) The ESM is key, but here too, there are concerns about the shorter term: full funding for the existing EFSF is not yet assured and a decision has been postponed.
There is also some bits of good news – at least in the sense of representing improvements on the previous proposals – regarding the policy coordination provisions in the Pact. For example, the discussion of unit labour costs, while far from perfect, is more balanced, the language more nuanced, and there is explicit recognition of the need for common initiatives to raise productivity in lagging regions/countries. The proposals for dealing with demographic challenges are more sensible (calling for higher participation rates). Employment concerns feature prominently, with unemployment and participation rates to be used as performance indicators. (What is not clear is what conclusions will be drawn if these indicators flash red.) Not least, there is a useful call for ‘pragmatic coordination of tax policies’ to avoid harmful tax competition and fight fraud, something I have repeatedly called for to be included in such a deal. Importantly the governance processes are also better, with the European Council (i.e. Heads of state and government), rather than finance ministers and DG Ecfin at the Commission, playing the leading role, and explicit recognition of the involvement of other actors (including social partners).
Many of the concerns raised in previous posts on economic governance reforms remain, however. The discussion of ‘competitiveness’ remains dogged by conceptual misunderstandings and asymmetries. The language on wage bargaining is very suggestive (but also vague). The need for a more staged and gradual approach to fiscal consolidation that allows for the negative impact on demand and output is still not recognized. And it remains unclear to me how the associated reporting and monitoring process squares with the parallel exercise under the Annual Growth Survey.
This is a political deal, an important one with some positive elements, but not a grand bargain. It is not a blueprint for growth, consolidation and convergence. But the ESM is an important prize. And, yes, we do need more policy integration in Europe. Had the balance of power been different, a different Pact would have emerged, but given the dominance of the Right on the Council, but also within the Commission and European Parliament, it could have been a lot worse. In most areas the language is sufficiently vague, meaning that struggles will no longer be at this programmatic level, but rather at the more concrete policy level. The process is non-binding. It remains to be seen how this will interact with the Annual Growth Survey’s more clearly liberal approach (at least for this first year) where the possibility of countries being sanctioned for non-compliance does raise concerns. It is vital that progressive governments, but also opposition parties, trade unions and other civil society actors develop and present solutions that promote productivity, participation and equality and sustainability; in short a new growth model. The reporting and monitoring processes of both the euro plus pact and the European semester/AGS should be seen as opportunities to push such policies and convince voters that progressive policies are the ones that promise a better future.
And in the short term the fight against blind austerity must continue and proposals put forward that chart out a path towards speedy recovery and lower unemployment. Whatever its positive aspects and significance in the longer run, this the euro plus pact does not and cannot offer.
http://www.social-europe.eu/2011/03/the-euro-plus-pact-a-plus-but-not-a-solution/
Economic governance
Protests mount ahead of EU summit
By Sophie Petitjean | Tuesday 21 June 2011
The European trade unions denounce the economic governance decisions and the 'euro plus pact' set to be validated by the European Parliament and the European Council (on 23 and 24 June, respectively). The day after the finance ministers' meeting and echoing protests by "the indignant," they took to the streets of Luxembourg, on 21 June, under the banner 'No to austerity. For a social Europe. For fair pay, investments and employment'.
The European Trade Union Confederation (ETUC) argues that the 'euro plus pact', which will apply to the eurozone and six other economies (Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania), will have serious implications for pay, social protection and the structure of collective bargaining. As the main organiser of the event together with the Luxembourg unions OGBL and LCGB, the ETUC denounces recommendations on "comparisons of unit labour costs; hostility towards wage indexation; a connection between pay and productivity without regard to inflation; downward pressure on public sector pay; downward pressure on pension rights and early retirement schemes as well as encouragement of strict constitutional controls on debt and public expenditure". The ETUC demands an immediate change of course in the direction of a social Europe, where economic governance is replaced by governance grounded in fairness and solidarity. This means that European citizens should have stable jobs and decent pay in order to protect and increase their purchasing power. The alternative proposed by the trade union movement also suggests 1. full respect for the autonomy of collective bargaining; 2. a tax on financial transactions; 3. eurobonds to stop financial markets from attacking vulnerable eurozone members and to finance a European recovery initiative; 4. an industrial policy to develop the low-carbon economy of the future; and 5. harmonisation of the tax base for corporate profits, together with a minimum tax rate.
Support from Socialists
In parallel with the demonstration, the French Socialist delegation in the European Parliament sent a clear message to MEPs: "We call on the Conservative majority in Europe to pay heed to the action of the European trade unions: political responsibility implies reversing the destructive thinking of these texts during the plenary session vote. Cutting workers' wages and delaying their retirement constitutes a danger for Europe. That is why we are proposing an alternative," declared Catherine Trautmann, head of the French Socialist delegation in the Parliament. Martin Schulz, chair of the S&D group in the EP, is one of the 4,500 signatories of the 'Change Europe' initiative ( www.changeforeurope.eu) opposing the economic governance package. This petition was launched on 6 June by the Greens and Socialist coordinators of the EP Committee on Economic and Monetary Affairs (ECON).
EAPN letter
After its general meeting, on 20 June, the European Anti-Poverty Network (EAPN) sent a letter to the heads of state and government to denounce rescue and bailout plans "that put people deeper into poverty and threaten social cohesion while reinforcing the dominance of the financial markets and speculating agencies". The letter makes a number of proposals for an alternative crisis exit. Like the European trade unions, the EAPN calls for enhancing the fight against tax evasion, organised crime and speculative trading. It also suggests that Europe's leaders: 1. place social and sustainable development, respect for human rights and solidarity at the heart of the EU's response to the crisis; 2. demonstrate that the poverty reduction target adopted at the June 2010 Council is a serious commitment; 3. defend and promote the welfare state and social rights; 4. defend access to public common goods (water, health, transport, social services) as a fundamental right; 5. strengthen the real economy, including support for social economy; 6. create the conditions allowing member states, especially those subject to compliance with EU-IMF financial arrangements, to borrow at reasonable interest rates; and 7. promote and implement measures to reduce inequality in incomes and wealth.
Indignant citizens
For weeks, the citizens themselves have been denouncing the socio-economic turn being taken by Europe, in actions like the occupation of Puerta del Sol in Madrid, Spain. This movement of "the indignant" has spread throughout some ten European countries via social networks, particularly in Spain, Greece, Portugal, France and Belgium. The demonstrators attack the Stability and Growth Pact and budgetary discipline as well as social precariousness and unemployment. "There is a huge problem in Europe today, as evidenced by the actions of the indignant. The ETUC is convinced that the economic governance being put in place is doomed to failure because it is unfair, dangerous and will not bring the expected results," explained Bernadette Ségol, ETUC general secretary, ahead of the Euro-demonstration.
http://www.europolitics.info/protests-mount-ahead-of-eu-summit-art307599.html
STRENGTHENING ECONOMIC GOVERNANCE IN THE EU
REPORT OF THE TASK FORCE TO THE EUROPEAN COUNCIL
Brussels, 21 October 2010-A really good idea to read this. I think a MUST read
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/117236.pdf
From Page 1. The recommended financial sanctions range from interest-bearing deposits to fines. They will be first applied to euro area Member States only. As soon as possible, and at the latest in the context of the next multi-annual financial framework, the enforcement measures will be extended to all Member States1, by making a range of EU expenditures conditional upon compliance with the SGP. (1 Except the UK as a consequence of Protocol 15 of the Treaty.)
From page 5: 17. New financial enforcement measures in relation to the Stability and Growth Pact should also be introduced.
18. The objective over the medium-term would be to include all Member States in the enforcement mechanism, having due regard to the specific situation of the UK in relation with Protocol 15 of the Treaties. However, a two-stage approach, starting with the euro area, is considered as a pragmatic way forward given the need to act rapidly to reinforce the SGP in the euro area which has a higher degree of integration:
(i) In the first stage, additional enforcement measures such as interest-bearing deposits and noninterest-bearing deposits and fines will be introduced only for the Euro area on the basis of Article 136 of the Treaty on the Functioning of the European Union (TFEU).
(ii) In a second stage, strengthened enforcement measures need to be implemented for all EU Member States, except the UK as a consequence of Protocol 15 of the Treaty, as soon as possible, and at the latest in the context of the next Multi-annual Financial Framework. This needs to be done by introducing conditionality rules on compliance with the SGP requirements in the relevant regulations on EU expenditures. The scope should be as broad as possible and the setting up must ensure a level playing field and equal treatment between Member States(enforcement measures should for example be defined as a percentage of GDP). Enforcement measures should in principle be implemented through the same steps as in the euro area.
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The European Semester.
The "European semester", a cycle of economic policy coordination to be launched as from next year, moved a step forward on 7 September, when the Economic and Financial Affairs Council (Ecofin) approved a reform that will allow its introduction.
The European semester is a six-month period every year during which the member states' budgetary and structural policies will be reviewed to detect any inconsistencies and emerging imbalances. The aim is to reinforce coordination while major budgetary decisions are still under preparation.
In a new monitoring cycle, the European Council each March will identify the main economic challenges facing the EU and give strategic advice on policies. Taking this guidance into account, the member states will present their medium-term budgetary strategies in their stability and convergence programmes. At the same time, they will draw up national reform programmes setting out the action to be undertaken to strengthen their policies in areas such as employment and social inclusion. All these programmes will be issued simultaneously in April.
Each July, on the basis of the programmes submitted in April, the European Council and the Council will provide policy advice before member states finalise their budgets for the following year.
The European semester is one of the first initiatives to emerge from a task force chaired by the President of the European Council, Herman Van Rompuy, with a view to strengthening European provisions on economic governance.
*** *** *** *** *** ***
European semester: a new architecture for the new EU Economic governance – Q&A
What is the European semester?
The economic crisis has revealed a clear need for stronger economic governance and coordination at EU level. Until now, discussions between the EU and Member States on economic priorities and structural reforms were taking place through different processes. Reports were issued separately and decisions spread across the year with no clear synergies or linkages.
This is why the Commission proposed in May (IP/10/561) and June 2010 (IP/10/859) to create a European Semester. This new governance architecture was approved by the Member States on 7 September 2010.
The European semester means the EU and the euro zone will coordinate ex ante their budgetary and economic policies, in line with both the Stability and Growth Pact and the Europe 2020 strategy.
The EU Semester starts with the Annual Growth Survey, in which the Commission provides a solid analysis on the basis of the progress on Europe 2020 targets, a macro-economic report and the joint employment report, and sets out an integrated approach to recovery and growth, concentrating on key measures. This applies to the EU as a whole and will then be translated into country-specific recommendations.
This will allow ex ante economic coordination at EU level while national budgets are still under preparation (See Annex 1).
How does European semester work?
This new cycle has several stages (see Annex 2):
· The new six-month cycle will start each year in January when the Commission publishes the Annual Growth Survey (AGS), to be discussed by Council formations and the European Parliament ahead of the Spring meeting of the European Council in March.
· At the Spring Council, Member States, essentially on the basis of the Annual Growth Survey, will identify the main challenges facing the EU and give strategic advice on policies.
· Taking this guidance into account, the Member States will present and discuss their medium-term budgetary strategies through Stability and Convergence Programmes and, at the same time, draw up National Reform Programmes setting out the action they will undertake in areas such as employment, research, innovation, energy or social inclusion. These two documents will be then sent in April to the European Commission for assessment.
· Based on the Commission's assessment, the Council will issue country-specific guidance by June and July and possible country-specific guidance to countries whose policies and budgets are out of line (for instance, if their plans are not realistic in terms of macroeconomic assumptions or they don't address the main challenges in terms of fiscal consolidation, competitiveness, imbalances, etc).
· Each July, the European Council and the Council of ministers will provide policy advice before Member States finalise their draft budgets for the following year. Draft budgets will then be sent by Governments to the national Parliaments, which continue to fully exercise their right to decide on budget. In other words, this new framework represents in no way a limit to the sovereignty of national parliaments.
How is this new surveillance cycle related to the Economic governance legislative package?
The Commission has made proposals to reinforce governance set of rules, including through stronger surveillance and enforcement mechanisms.
The elements of this more rigorous approach were outlined in the Commission's communication of 12 May and a concrete "toolbox" was presented in a second communication on 30 June. This was complemented by preparatory work and consultations with a broad range of stakeholders, in particular by the Task Force on Economic Governance chaired by President of the European Council Herman Van Rompuy.
On 29 September, Commission presented a legislative package. The core elements of Commission proposals on Economic governance are the reinforcement of the Stability and Growth Pact (SGP), extending surveillance to macroeconomic imbalances and the setting up a wider range of incentives and sanctions, which would kick in at an earlier stage (IP/10/1199 and MEMO/10/454, MEMO/10/455 and MEMO/10/456).These proposals were welcomed by the European Council in October and December. Commission, European Parliament and Council have agreed that they should be "fast-tracked" and adopted by Summer 2011, and thus be part of the new governance cycle.
http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/14
EUROPEAN SEMESTER
27. From 2011 Member States' reporting obligations under Europe 2020 and the Stability and Growth Pact will operate to a common timetable known as the "European semester"[24]. The Minister called this an important detail and "a positive development in economic governance", making for coherence, consistency and a more holistic approach[25], though again it would not be a panacea[26].
28. Currently the Convergence Programme must be updated by 1 March each year. The UK's last one was submitted on 28 January 2010[27].Under the European semester, the Convergence Programme and the NRP will be submitted together in April. http://www.publications.parliament.uk/pa/ld201011/ldselect/ldeucom/81/8103.htm#a9
The Future of Economic Governance in the EU 22 March 2011.
http://www.publications.parliament.uk/pa/ld201011/ldselect/ldeucom/124/12402.htm#evidence
54. We believe that the political imperatives holding the euro area together are strong, and we do not think it is likely that any country, whether fiscally weak or strong, will try to leave voluntarily. We do, however, recognise that it is now conceivable that a country could be forced to leave the euro, or that the euro area could separate into two parts.
55. Any break-up of the euro area would not only be economically and politically costly for those Member States leaving the euro, but would have a damaging impact on all members of the euro area and the wider EU, not least the UK.
60. We did not receive compelling evidence to suggest that the Eurogroup needed a more formal role and position. Such a move could have implications for the UK and for the position of ECOFIN as the ultimate decision-making body on financial and economic matters. Recent decisions by the Eurogroup to adopt a "Pact for the Euro" have brought these implications into sharp relief.
Speaking with a single voice
153. The euro area crisis has made clear the need to extend surveillance to monitor and correct macroeconomic imbalances that threaten the stability of the euro area. Fiscal discipline alone is not sufficient to ensure the stability of the monetary union. We welcome therefore the Commission's proposals to monitor excessive imbalances.
154. It is essential that the level of private debt should be monitored as part of any comprehensive surveillance mechanism and we welcome the Commission's proposals to ensure that this is included under new proposals to detect excessive imbalances.
155. We recognise the intrinsic difficulty of defining, measuring and analysing macroeconomic imbalances, and distinguishing between excessive and benign imbalances. Therefore the success or otherwise of the planned macroeconomic surveillance will depend on the capacity of the early warning system to detect excessive imbalances at a sufficiently early stage, and Member States having the political will to engage in honest discussion of the results. This calls for judgement in distinguishing between macroeconomic developments which can be blamed on national policy choices (such as property bubbles), improvements in competitiveness that arise from sound structural policies, and current account divergences that reflect inconsistencies between domestic demand among Member States.
156. We recognise that there are two sides to current account imbalances, but we do not believe that countries in surplus should be subject to the same procedures as those in deficit. Where excessive current account deficits arise as a result of national policy choices, it is proper that they should be the subject of corrective recommendations under these proposals. It is not appropriate or realistic, however, to issue corrective recommendations to a country with a current account surplus. Nevertheless, surpluses are not always benign and it is important that surplus countries also face pressure from their peers to contribute to the reduction of imbalances in ways which do not damage their global competitiveness.
157. The causes of the current crisis are now well known; the causes of any future crisis, however, are likely to be different. The Commission and Member States must ensure that the criteria and types of imbalance covered by this surveillance are regularly reviewed to maintain their relevance as EU and global economies develop.
Enforcing competitiveness?
If you want to know what your Government is doing in your name it is up to you whether you read all of this-the choice is yours.
http://www.publications.parliament.uk/pa/ld201011/ldselect/ldeucom/124/12402.htm
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