Local view for "http://purl.org/linkedpolitics/eu/plenary/2004-09-15-Speech-3-110"
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"en.20040915.6.3-110"2
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"Mr President, ladies and gentlemen, history tells of many attempts at introducing a single currency in countries that were not joined together in a political union. Sooner or later, all of them ended in failure. It was intended that the euro should escape that fate. The Stability and Growth Pact was concluded in order to oblige the members of the eurozone to adhere to standards meant to guarantee the currency’s stability. There was meant to be an effective sanctions mechanism to bring those sinners who transgressed these rules promptly back to the path of virtue and thus make the euro credible to the finance markets and in the eyes of the public.
The reality is rather different. For the third time in succession this year, Germany and France have breached the 3% deficit limit. Despite that, the sanctions mechanism has not yet kicked in. The pact risks being revealed to be a paper tiger; confidence in the euro is shattered, and so the Group of the Alliance of Liberals and Democrats for Europe welcomes the promptness and decisiveness with which Commissioner Almunia has come up with proposals for saving the Pact.
We see it as a good thing that the deficit threshold should, in principle, remain at 3%. We think it right that a state’s overall indebtedness should be more closely monitored. We accept the need to take account of population change in the Member States and its – largely adverse – effect on budgets. We welcome the observation that Member States have to accumulate surpluses in good times in order to be able to build up reserves for the bad ones, self-evident though that is.
Favourable though our assessment of individual elements is, we are critical of the Commission proposal as a whole. We could exaggerate and say that, as reality is not obeying the rules, the rules are being adapted to fit it. In policy terms, Germany and France have got their way, at least for the time being. For as long as the wrongdoers play a part in deciding whether or not an offence has been committed, it remains uncertain whether the sanctions mechanism will ever become operational. The origin of Germany’s difficulties is not to be found in the Stability and Growth Pact; the problems are structural and start at home. No reserves were built up when the going was good; reforms were needed but were not tackled with sufficient determination, and the state’s finances were not consolidated. The only things that will help to increase competitiveness and generate sustainable growth are a simple and attractive tax system, deregulated labour markets, and renewal of the social security and education systems.
Our principal criticism of the Commission’s proposals has to do with the criteria for assessing whether or not a country is adhering to the Pact, which leave a great deal of room for interpretation of such factors as, for example, adverse economic conditions, particular circumstances resulting in poor long-term growth, and factors specific to individual countries relating to the adjustment of excessive deficits. We find it doubtful that group pressure has any positive effect on the way Member States behave; on the contrary, there will be even more political chumminess of the ‘you scratch my back and I’ll scratch yours’ variety. For that reason, the evaluation criteria must be unambiguous and easy to understand.
We welcome the Commissioner’s intention to make Member States’ budget policies more transparent and more binding, not least as a result of the publicity that regular reports to the European Parliament and debates on them will attract. Last weekend, Mr Jean-Claude Juncker was elected President of the euro group for the next two years. We hope he will manage to get the Member States to identify more with the Stability and Growth Pact and develop a greater sense of responsibility for it. The euro is a unique success story and must remain stable for Europe’s sake and in the public interest."@en1
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