AN EMERGENCY EU summit is to “clear the air” in the aftermath of the Greek election and demands from the incoming French president to put new measures to promote economic growth in the fiscal treaty. Leaders stressed yesterday the need for both growth and fiscal discipline.
The informal dinner meeting, called by European Council president Herman von Rompuy takes place on May 23rd in Brussels, as leaders ponder the threat to the Greek bailout in the wake of the election.
The summit comes against the backdrop of renewed uncertainty over the fate of Greece, where parties opposed to the austerity package tied to its second bailout won the most votes in the general election last Sunday.
The fragmented state of the Greek parties has led most European observers to anticipate that new elections are now in prospect, with another “technical” government taking charge of the country in the interim. At the same time, there is concern that anti-bailout parties would see their support rise in any new poll.
A senior European source said the summit was required to “clear the air” as EU leaders work on a strategy to boost growth.
The aim is to continue with policies to restore order in the public finances of weak member states while taking initiatives to ensure the European economy expands.
“The debate of consolidation versus growth is a false debate,” EU economics commissioner Olli Rehn told reporters. “In the current economic situation of low growth and high debt, there is no choice – we need to pursue both simultaneously.”
Mr van Rompuy called the meeting three days after French socialist leader François Hollande ousted president Nicolas Sarkozy.
Mr Hollande campaigned for months to put growth at the top of the European agenda and renegotiate the fiscal treaty, but the latter demand is being resisted by German chancellor Angela Merkel. The European source said the summit would provide an opportunity for Mr Hollande to explain what he had in mind.
Under debate at the moment is whether the incoming president would be satisfied with a package that would not go into the treaty or whether he would hold out to have a binding legal protocol added.
His declared requirement for a change to the treaty is already having an impact on the Irish referendum trail, with the Government having to defend claims from the No camp that it wants the people to vote on an agreement which is set to be changed.
In Brussels yesterday, European Commission president José Manuel Barroso rejected the contention that rising populism could be directly attributed to Europe’s austerity policies and said the trend predated the euro zone crisis.
Without naming Ireland, he said all “programme countries” – bailout recipients – had to continue consolidating budgets.
Mr Barroso reiterated the need for a “twin-track” response of stability and growth. “That means restoring sustainability to our public finances – because the crisis has shown that debt-fuelled growth is unsustainable. And it means creating the conditions for growth and jobs, through structural reform and targeted investment.”
