Today EU leaders will discuss a very important proposal put forward by France and Germany. It’s all about fiscal supervision and bail-outs, and the question is whether an amendment of the Treaties is necessary or not. Germany insists that a credible system of fiscal monitoring needs a credible sanctioning mechanism in order to keep EU Member States’ spending in check. To do that, Germany proposes the introduction of new texts in the Treaties. In exchange Germany would support a permanent bail-out mechanism. But it turns out that many are opposed to this proposal.
A number of media (EUobserver, Euractiv, FT’s brusselsblog) report that a number of Member states are very critical of the proposal. Viviane Reding has called the plans “irresponsible” and has been immediately reprimanded by France’s State Secretary in charge of European affairs, Pierre Lellouche. But that’s another story.
The important debate here is not whether an amendment is achievable in the medium term (it will probably be put to referendum in Ireland and possibly the UK and Denmark). The conceptual shift in the coordination of economic governance is where interests of Member States diverge.
Germany wants to impose strict fiscal discipline on all eurozone members, including the possibility of removing a Member State’s voting rights. But many argue that such budget austerity may not be the solution to the problem. George Soros himself has compared the proposals to the 1930s, where some countries became overly focused on balancing budgets during a depression. Other go further and note that it is Greece, in fact, which is bailing out Germany – in the form of an annual trade deficit that has averaged 5 billion euros, stimulating German jobs but destroying them in Greece. That is why many economists advocate for measures to stimulate demand in trade surplus countries – Germany, Netherlands, Denmark, etc.
Axel Weber, president of the German national bank, disagrees. He says that the proposal of raising wages to support domestic demand and reduce competitiveness neglects that wages are not a political control variable. Moreover, according to him simulation studies show that the effects would be confined almost entirely to the home economy in the form of changes in employment.
So who’s got it right? I’m not sure, and I am (thankfully) not an economist. But the German position will not be easy to defend unless it addresses the concerns about German policies that stimulate the aggregation of a trade surplus.
Posted in Budget and Finance, EU Reform, Institutional Affairs, Internal Market
Tagged amendment, bail-out, Economic Governance, excessive deficit procedure, fiscal policy coordination, France, Germany, sanctions, trading surplus, Viviane Reding
In what should sound as a happy end to a very unpleasant episode of EU history, France has agreed to insert certain provisions of Directive 2004/38/EC into national law texts. That is a welcome development, but I remain quite interested in the facts surrounding the recent mass expulsions of Roma citizens to Bulgaria and Romania. Infringement of EU law does not come only in the form of lack of transposition, but also in the form of direct transgression.
In recent days both Turkish and European politicians have spoken in favor of the Turkish accession to the European Union. Egemen Bağış, Turkey’s chief EU negotiator, sought to unblock Ankara’s accession bid by calling on European Union countries to call referenda on the country’s EU membership. Germany’s ex-foreign minister Joschka Fischer has predicted that Austrian, French and German opposition to Turkey joining the European Union will melt away with time.
In both cases the main argument is the strength of the Turkish economy and the demographic profile of the population – Turkey’s median population age is just 28 compared to 42 in the Union and its economy grew by around 11 percent in the first half of this year compared to the EU’s 1-2 percent.
But this will not suffice. The criteria for accession are now legally binding (art. 49 TFEU), and they include the so-called “political criteria” that are especially hard to meet. The “political criteria” include stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities.
Turkey must strive to cover these criteria in the first place. No level of economic development can substitute for the lack of democracy or respect of human rights. The Turkish narrative must be centered on the promotion of democratic values, and only after that – on economic development. Otherwise Turkey will only position itself as a valuable trading partner and an immigration source, but not as a potential Member State.
Posted in Enlargement, Human Rights, Institutional Affairs, Justice and Internal Affairs
Tagged accession, democracy, demographic profile, economic development. Austria, France, Germany, Human Rights, political criteria, protection of minorities, rule of law, Turkey
UPDATE: The Commission has decided that it will issue a letter of formal notice to France requesting the full transposition of Directive 2004/38/EC, unless draft transposition measures and a detailed transposition schedule are provided by 15 October 2010. The Commission is also analysing the situation of all other EU Member States under Directive 2004/38/EC to assess whether it will be necessary to initiate infringement proceedings also in other cases.
This is an important development if it results in more pressure on Member States to comply with Directive 2004/38/EC.
The European Commissioner for Justice Viviane Reding has made a very strong statement on the problem with the mass expulsion of Roma from France. She says that the political assurances given by two French ministers on the non-discriminatory character of the expulsions are now openly contradicted by an administrative circular issued by the French government. She further calls this “a disgrace”.
More importantly, Mrs. Reding has taken notice of comments by the French Secretary of State for European Affairs questioning the role of the European Commission as a guardian of the Treaties. She notes that the Commission’s role as guardian of the Treaties is one of the foundations of the European Union – a Union which is held together not by force, but by respect of the rule of law agree upon by all Member States, including France.
She further says that the Commission will have no choice but to initiate infringement action against France.
This analysis confirms my earlier assessment of the issue. It is high time that the European politicians grasp the importance of the legal foundation of the European Union.
The debate in the European Parliament on the mass expulsions of Roma from France to both Bulgaria and Romania was obviously quite heated. The European Commission failed to provide a clear answer to the question whether France has violated relevant EU law. This is not a surprise given the short time frame and the preference of the Commission for quiet negotiations and bargaining with Member States rather than using formal sanctions.