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03/10/2011 The European Parliament adopts the economic governance package

At September 28th’s plenary session, the European Parliament voted in the economic governance package. The Parliament President welcomed the positive outcome of this hotly anticipated vote on the six reports regarding the Stability and Growth Pact. “We have achieved something great”, said Jerzy Buzek. The economic governance package has been the subject of intense negotiations since last April. This vote should lead to major reform of economic governance that is often criticised by the left.

Positive reactions in Parliament...

Congratulations flooded in after the vote on the economic governance package was made. The vote however was narrowly won as centre-left groups abstained and voted against certain sections of the agreement. The European Parliament President praised the Trojan work of the six rapporteurs who should be able to take a breath for the next few days. “My diary for next week is now empty” joked rapporteur Diogo Feio (EPP PT).

“We have succeeded in strengthening the Stability Pact and we now have an economic code that will help us to avoid future crises”, Mr. Buzek said. He believes that it is not about simple sanctions but rather a mechanism that will focus on “prevention rather than cure”.

The new package should put in place greater discipline for sustainable public finances; less negotiation between Member States with strengthening of the European Commission’s role, general surveillance of macroeconomic imbalances; new “economic dialogue” within the European Parliament and a “European Semester” for coordinating economic policies.

The economic governance package offers solutions for the medium and long term but the European crisis remains the priority in the short term. Jerzy Buzek is therefore calling on national parliaments to quickly pass the six pack. Criticism of the European Institutions has gathered momentum in recent weeks as the economic crisis has become more and more worrying.

“It’s a great day”, said Sharon Bowles, President of the Economic and Financial Affairs committee as this agreement, “shows the world that the EU is capable of resolving its economic problems.” This agreement is “not just a piece of paper”, in the words of rapporteur Corien Worthmann-Kool, “it is a real piece of legislation” promoting the community method.

Sylvie Goulard, rapporteur on one of the six texts, said that it is a “balanced agreement”. The ALDE MEP was very pleased with the transparent way discussions were held and the initiation of a “mechanism for debate that goes beyond borders and that did not exist before”. She went on to say that the decision made in Parliament brings Europe one step closer to being able to avail of credit on the global debt market. Henceforth there will be a bridge between the European Institutions. Ms. Goulard praised the role of European Commissioner Olli Rehn for his work on this tricky package. Sylvie Goulard did not feel it was time to celebrate too much however as adoption of the six pack “is not the end of the story.”

The question of Eurobonds is still a “delicate” one. The issuing of common Eurobonds with strict conditions attached will enable countries to gain liquidity on the global market. European Commissioner Olli Rehn is committed to working on proposals for this in a report on Eurobonds that is expected to be released by the end of 2011. Legislative proposals are expected to be about joint liability being limited to a part of the debt with a liquidity premium to limit the costs for compliant States.

Last week, European Central Bank President, Jean-Claude Trichet congratulated negotiators in Parliament for resisting all attempts to water down the package, “When I compare the agreement to the initial proposals, considerable improvements have been made. I want to congratulate the Parliament for this stellar work”.

... criticism from the left however

While the passing of the six pack received a certain degree of enthusiasm in Parliament, French and European socialists see it as an austerity package that prevents Member States from being able to get their economies moving again and from protecting themselves from the markets.
Rapporteur Elisa Ferreira (S&D), called the text an “unbalanced agreement that is like a wobbly table with one leg shorter than the other”.  “While it is obviously necessary to monitor that public accounts are well managed, ordering austerity now would put a dampener on growth and employment. As a result, we will never be able to pay back the debt. Everyone has their responsibilities”, said Catherine Trautmann, President of the French Socialists Delegation in the European Parliament.

“The European Union is now at a crossroads, either its representatives show their willingness to unite against the markets, or they choose to retreat into nationalism and defend selfish interests that will put an end to the European project”, stated MEP Pervenche Berès. 

 

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