European integration, Following the European Spring Council
Euro+Pact: a new integration formula in the European Union
In the efforts to reinforce the EU monetary and economic union, the European Spring Council (24-25 March) has shown the EU member states’ desire to strengthen Union’s integration. Six countries, including Poland, Latvia and Lithuania with other states outside eurozone joined the new formula, i.e. Euro+Pact. The Council has also underlined members’ strong support for deepening of the Single Market’s reforms and performance.
The EU-27 leaders, with the help of all EU institutions have done a good and important job towards stronger Union. The main aim was to make closer links between the monetary and economic “unions”. A political headache caused by the Portugal’s crisis darkened the work of the summit. With the idea of saving the euro with efforts -“whatever it takes”, the EU member states have shown that the important things are the structural reforms needed to transform un-competitive economies.
Main directions
The Council made a real game-changer in terms of economic governance. The Commission’s President explained that the European Commission has been working hard to develop a comprehensive response to the crisis and stressed that the Commission together with the European Parliament would play a central role in the implementation of the Council’s decisions. That was an important message showing the critical role of the European Parliament in political and economic life of the Union.
Besides, the EU leaders endorsed the Commission's call for a comprehensive safety and risk assessment associated with the European nuclear power plants and those in the EU neighboring countries. In view of the present nuclear power problems in Japan, the EU leaders endorsed the Commission's call for a comprehensive safety and risk assessment associated with the European nuclear power plants and those in the Union’s neighboring countries. These assessments must be done on the basis of clear, common and transparent criteria, underlined the Commission.
Comprehensive package
In the conclusions of the Council to the EU-27 delegates from the General Secretariat of the Council on 25 March 2011 (EUCO 10/11), a comprehensive package of measures to eradicate the crisis and actions toward sustainable growth has been formulated. The package includes measures on economic policy, with implementing “European Semester’s” measures aimed at fiscal consolidation and structural reforms.
The European Council welcomed the Commission’s intention to present the Single Market Act for adoption by the end of 2012, bringing new impetus into market’s performance. Among other things, there are proposals for completing the Digital Single Market, reducing all sorts of burden to SMEs and implementing services Directive.
On issues of economic governance, the Council adopted a package of six legislative proposals to ensure enhanced fiscal discipline and avoiding excessive macroeconomic imbalances, including a reform of the Stability and Growth Pact.
A new “quality of economic policy coordination”, so-called the Euro Plus Pact was agreed by the member states and 6 courtiers outside the eurozone joined the pact, including Latvia, Lithuania and Poland. The Euro Plus Pact provisions are included into the Annex I of the final summit document.
In restoring a healthy banking system, the Council agreed on introduction of global financial transaction tax; the Commission will make a report on the issue by autumn 2011.
Guiding rules
Euro+Plus pact is based on four guiding rules, aimed at:
- Strengthening existing economic governance in Europe, in addition to already existing instruments, e.g. EU-2020 strategy, European Semester, Integrated Guidelines, Stability and Growth Pact, as well a new micro-economic surveilance framework;
- Reviving actions towards development of priority economic areas essential for fostering competitiveness and convergence, in particular, where economic competence lies within the member states;
- Assessment of the member states’ national commitments through best practices and performance within the EU-27 on the basis of the Commission’s yearly reports;
- New commitments towards the completetion of the Single Mrket as a key and fundamental factor of enhancing European and global competitiveness.
The Euro+Pact objectives
The above mentioned rules are desired to reach the following objectives:
- foster competitiveness: among the efforts in this objective are wage and productivity (but respecting national traditions of social dialogue and industrial relations), improving education systems and promoting R&D, innovations and infrastructure. Additional measures to improve business environment, mainly for the SMEs through elaborate bankruptcy laws and the EU commercial code;
-foster employment through promotion of flexicurity system (used in Scandinavian countries), life long learning and tax reform;
- contribute further to the sustainability of public finances with additional attention to such issues as adequacy of pensions and social benefits, e.g. limiting early retirement above 55;
- reinforce financial stability.
Stability mechanism in eurozone
Recalling the importance of financial stability in the eurozone states, the European Council adopted the decision to amend the Lisbon Treaty with regard to setting up of the European Stability Mechanism (the changes will take place before January 2013). The ESM is expected to have an effective lending capacity of € 440 bln; the signature of both agreements is expected before June 2011.
Before the June European Council, the Commission will present the country-specific opinions on both stability/convergence programs in the member states and the national reforms programs. It seems that the Council has shown the way to reinforce the EU monetary and economic union and make new steps towards closer integration.
Eugene ETERIS, European correspondent