WORLD VIEW:Lisbon makes economic co-ordination likely, but not all member states want to cede control, writes PATRICK SMYTH
IN ALL the column inches devoted in Lisbon debates to presidents and foreign ministers for Europe, peacekeeping or peacemaking, the new voting rules on commission economic assessments of member states seem not to have registered on our political Richter scale. As they say in Washington, it is a bit “inside the Beltway”.
Now it’s all they are talking about in Brussels. Incoming commissioner for monetary affairs Olli Rehn says we should “benefit from the opportunity the Lisbon Treaty opens as regards reinforced economic co-ordination”. The post-Lisbon “new reality” is a common theme.
With Greece being prescribed tough medicine by Brussels and next week’s special summit set to debate and adopt the commission’s EU2020 report on enhancing competitiveness, “enhanced economic co-ordination” – “enforced” might be a better word – is firmly back on the agenda, although whether this plane flies is another matter.
Former commission president and architect of economic and monetary union, Jacques Delors, always denounced the imbalance between its two pillars: the monetary, working well under the firm control of the European Central Bank and the economic, largely still an aspirational monitoring and benchmarking exercise without real teeth. Compulsion has been used, but in competition and internal market policy, not fiscal policy.
There have always been supporters of a more robust approach, like the French and Spanish, but others, not least the Germans, fearful of eroding the ECB’s anti-inflation mandate or national sovereignty on fiscal matters, have always resisted. Ireland has traditionally been among the latter. But Lisbon, by allowing states to vote by majority to sanction countries that misbehave economically, has re-opened the opportunity to get collective economic governance into the air.
In recent weeks, they have all been at it. The new president of the European Council Herman Van Rompuy said three weeks ago that ways must be found to enhance “shared commitment”, particularly in the euro zone. He disparaged the “rather soft” instruments of peer review and benchmarking deployed in the old “Lisbon” strategy, arguing such instruments did not on their own create political commitment.
Luxembourg’s prime minister Jean-Claude Juncker, re-appointed president of the Eurogroup, sent a work programme to ministers which prioritises the issue: economic supervision is expected to go beyond budgetary considerations.
In his letter, he points out that the Lisbon Treaty explicitly includes the elaboration of economic policy orientations for the euro zone, as well as supervision of their application.
The commission has indicated it intends to develop a supervisory guideline mechanism that goes beyond country-by-country recommendations. “In the past, some national politicians have resisted stronger mechanisms of governance,” president José-Manuel Barroso said last month. “I hope that . . . all EU governments will now recognise the need for full ownership of ‘EU2020’ and for a truly coordinated and coherent action in economic policy.”
Announcing his plans for the Spanish presidency, Spanish prime minister José-Luis Zapatero called for a “qualitative leap” in the economic governance of the EU, including “binding” targets and penalties for laggards, and new economic policing powers for the commission.
“I agreed with president Sarkozy that if the European Union really wants to be a political union which works for its citizens, it has to have a much more solid economic government and with tools,” he told reporters. “I can’t see a single market, a single currency, then not see an economic government with powers, with tools.
He told MEPs: “Economic governance calls for a ‘community’ method. Sanctions and requirements are not words which should be scary . . . If the convergence criteria are not respected, there should be punishments . . . This is how the internal market and the stability and growth pact work.”
Speaking on behalf of the Liberal Group, former Belgian prime minister Guy Verhofstadt said he was “most encouraged” by what Mr Zapatero had to say.
“The question is whether the member states will be prepared to change the method which has failed in the past Lisbon strategy, the one of ‘open co-ordination’, which basically comes down to just comparing the results” of the various national policies, he said. The future European method of economic governance should be given “carrots as well as sticks, if necessary”, he added.
Timothy Kirkhope, the leader of the Conservatives, opposed binding objectives and sanctions – “old socialist methods”, he said.
And the truth is that when they meet in Spain next week, most leaders are unlikely to want to fundamentally change their approach. An Irish Government memo to the presidency, reflecting majority opinion, made clear last week that whatever theoretical changes the Lisbon treaty implied “within an overall ‘EU2020’ strategy framework, individual member states should select their own mix of domestic policies best suited to their circumstances and reflective of engagement with national stakeholders”.
“Ireland is of the view that the focus for the ‘EU2020’ strategy should primarily be on overall outcomes rather than strict adherence to meeting specific targets in each sectoral area.”
This one just won’t fly. Yet.