01 MAR 2011
By Leigh Phillips
EUOBSERVER / BRUSSELS - New proposals on joint economic governance put forward by European Commission President Jose Manuel Barroso and EU Council chief Herman Van Rompuy on Monday (28 February) have failed to overcome resistance from some member states.
Monday's debate in Brussels was "just a step forward, but things for some are still not satisfactory. There was something like a wait-and-see attitude" a diplomat from one northern European country said. "There definitely wasn't a breakthrough, but it also wasn't a flop either."
The Barroso-Van-Rompuy blueprint is designed to overcome resistance to an earlier Franco-German "Competitiveness Pact' by tweaking some of its proposals.
Under the Barroso-Van-Rompuy version, enforcement of competitiveness will be overseen by the European Commission rather than the member states themselves.
The Barroso-Van-Rompuy plan does contain a requirement that German-style 'debt brakes' be implemented across the eurozone, however. Resistance to this element comes from those who do not want to open the Pandora's Box of constitutional amendments this could entail.
Opposition to the Franco-German pact also revolved around the proposal that countries that maintain inflation-indexed wage systems abandon this practice. Belgium and Luxembourg in particular were resistant.
Under a compromise in the new rules, these systems can remain, but in such circumstances governments would be required to develop other ways to reduce wages. A monitoring system would also be introduced, keeping an eye on wage and productivity levels in the different states and a mechanism for their reduction should they become a threat to competitiveness.
Even after the presentation of the new compromise, the issue of wage moderation remains "tricky" according to another EU diplomat.
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