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What is the bargain here?
Date 15/09/2010 14:24  Author webmaster  Hits 2772  Language Global

By Marta Andreasen MEP
Last Monday, as member of the Budget committtee, I presented an opinion on the recommendations for improving the economic governance and stability  framework.

This is the first time since I took up my mandate, that I have been given the opportunity to draft a report of any kind. I am sure you can guess why it never happened before.

This improvement of economic governance is basically an attempt to reinvigorate the Stability and Growth Pact which failed to achieve its objective fundamentally due to the weakness in its enforcement.

Article 126 of the treaty (TFEU) establishes the disciplinary procedures to be carried out but these were not carried out when France and Germany  breached the pact in the past. The Commission took the Council to the ECJ over this breach but the Court failed to support the application of any sanctions.

Now they are trying to impose a procedure whereby the EU will be involved in all national budgets with a view to avoid high deficits or indebtedness. They say that once they see the budgets they will issue recommendations but I see no guarantee that these will be followed because the EU institutions are not serious about taking action when there is a breach.

The matter for which I can find no justifiction is why George Osborne has agreed to have UK´s budget reviewed by the EU. The UK is not part of the eurozone and has coped with the crisis with its own resources. What is worse is that if any of the eurozone members faced bankruptcy then the UK would have to be part of the rescue package. What is the bargain here?

The second part of the opinion was, in my view of greater importance. I was actually asking for the details of the 60 billion Euro rescue package that will have to be guaranteed by the EU as was agreed back in May. Nobody actually wants to discuss this.

I pointed out the fact that the guarantors of this financial stabilisation package were actually the Member States many of which are themselves in the midst of a financial crisis.

I advised on the need to establish the impact on the credit rating  of the EU  and also about the need to request from the Commission to produce a report establishing the prioritisation of spending from the budget in case the EU was called to honor the guarantee.

My advice was certainly not welcomed as it exposes the sad truth: that there is no real money to finance this rescue package nor the remaining 700 billion that the member states will have to contribute directly.

The Socialists radically rejected the whole documente. The PPE managed to utter that with amendments the opinion could get a favourable vote. It will not surprise me if the amendments completely gut the opinion and I will then have to disown it.

We shall see!