Cause and Effect in European Politics and Law

The European Parliament criticized the intergovernmental approach in the Euro Plus Pact

Ralitsa Kovacheva, April 6, 2011

The Presidents of the European Council Herman Van Rompuy and the European Commission Jose Manuel Barroso were subjected to heavy crossfire in the European Parliament after they acquainted MEPs with the results of the Spring European Council on 24 and 25 March.

Primarily Mr Van Rompuy underlined the creation of the European Stability Mechanism (ESM) and stressed that the Parliament had backed the Treaty change to establish the Mechanism. He welcomed the collaboration with EP rapporteurs Elmar Brok (EPP, Germany) and Roberto Gualtieri (PASD, Italy) - during which “we were able to reassure Parliament about some of the concerns that had been raised”.

Mr Van Rompuy reminded that the EU leaders had approved the Commission's proposals on budgetary and macro-economic surveillance in the EU (which should be adopted be Parliament by June) and agreed to conduct credible stress-tests for banks, where, he said “the task is double: banks must do the tests; governments must be ready to deal with the outcome of the tests.“

The President of the European Council paid special attention to the Euro Plus Pact and assured lawmakers that the political commitments under the Pact were based on the already agreed European framework: “stronger Stability and Growth Pact on fiscal surveillance; new macro-economic surveillance; and implementation of the crucial EU 2020 strategy on structural reforms to achieve economic growth.”

One year after the creation of his Task Force on economic governance, Mr Van Rompuy recognised that its work “was and remains an effort of all institutions, including your Parliament and all Member States: not always easy, not always without drama, but the political will has been unflinching, our sense of direction is clear and significant results are there”.

The accent in the speech of Commission President Jose Manuel Barroso was that the European Council's decisions had reflected the Community approach, as a result of the determination of the Commission and the Parliament. He gave as an example the creation of a European Stability Mechanism, where the Commission and the Parliament were also engaged.

The arguments of the two presidents, however, failed to convince MEPs in the final victory of the community approach and all parliamentary groups - in a milder or a more acute tone - criticized the leaders that they had not sufficiently defended it.

The Chairman of the largest parliamentary group – that of the European People's Party (EPP) - Joseph Daul defined the results of the European Council as a step in the right direction. He expressed his party's support for the Euro Plus Pact and defined it as an “extremely significant” but stressed that its implementation had to comply with the Community approach.

Socialist leader Martin Schulz (Progressive Alliance of Socialists and Democrats, PASD) attacked particularly acutely Commission President Jose Manuel Barroso over the collapse of the Portuguese Socialist government. He accused Mr Barroso's party of "bringing down the Government for implementing the policies that you and the Commission demanded." Mr Schulz blamed EU leaders in delaying their actions to resolve the debt crisis in the euro area and that instead of making public investments, “Europe is cutting itself to death.”

As usually, the most critical of the intergovernmental approach to tackle the debt crisis was the leader of the ALDE Group (Alliance of Liberals and Democrats for Europe), Guy Verhofstadt. So far the debt crisis costs the EU a total of 400 billion euro, he calculated, including the bail-out loans for Greece and Ireland, the purchase of debt by the ECB, the money given to save banks. This is three times EU's [annual] budget, Verhofstadt stated, adding that the only radical solution to the debt crisis is the creation of a real Eurobonds market. He warned again that both the current rescue fund and the future ESM wouldn’t work because of the requirement for unanimity when taking decisions. The Euro Plus Pact is too weak, because there is no mechanism to enforce it, the former Belgian Prime Minister stated.

The Co-Chairman of the Greens/EFA Group, Daniel Cohn-Bendit, supported his colleague Guy Verhofstadt in terms of the creation of a common Eurobonds market and added: “We should have Eurobonds not only to protect ourselves, but to invest”. He said the European Union must respond to the feeling of injustice among the citizens because they continued to pay the price of saving the banks.

The same pathos was shared by most MEPs. In their speeches they repeated the same accusations against the Commission and the Council - that the ESM was built upon an intergovernmental approach; that it must be funded also by the most troubled euro area economies; that the EU was unfair to the Irish people who paid a high price for saving their banks; that France and Germany pursued “unfair and undemocratic" pressure on the government in Dublin to increase the corporation tax. “What is Europe doing to create credible rating agencies?”, Ms Edith Estrella (PASD, Portugal) asked, adding that because of the rating agencies “the enormous efforts of Portuguese people go right into the pockets of speculators”.

Some extravagant proposals could be heard too, such as Greece to return to the drachma and Portugal - to the escudo. Ms Sylvie Goulard (ALDE, France) recalled about the new division of Europe – into North and South. Many northern countries now teach the southern ones and tell them what they have done wrong but they do not see their own mistakes at home, she said.

Mr Alain Lamassoure (EPP, France) welcomed the establishment of the Euro Plus Pact, but warned that in order to legitimise its decisions, national parliaments must be involved. Since its very beginning the Pact is based on intergovernmental relations which create tension among Member States, so we need to transform this, if not in a community, at least in a European method, Mr Lamassoure called.

His colleague Dr Andrey Kovachev (EPP, Bulgaria) said that sooner or later the European economic policies should be based on the community method and not on the intergovernmental one. “Perhaps the day is not far when there will be an intergovernmental conference or why not a Convention on economic and political governance of Europe.” He stressed that “it was the right decision the six countries outside the euro area, including Bulgaria, to join the Euro Plus Pact in order to be able to actively participate in the decision making process”.

The MEPs widely criticized Commission President Jose Manuel Barroso that so far, despite pressure from the Parliament, there was no consensus on the introduction of the financial transactions tax in the EU. Mr Barroso replied bluntly that he personally endeavored in this direction, but “several Member States opposed it fundamentally and they will not agree”.

Although being criticized, Mr Barroso at least got the right to respond to criticism unlike European Council President Herman Van Rompuy, who tried to answer despite the unimaginable noise in the plenary. The Chairperson of the session repeatedly rebuked her colleagues and urged them to take their seats, but MEPs demonstrated clearly their unwillingness to hear any more explanations.

More about the views of the European Parliament on the direction the EU should move after the crisis you can find in the next few days when euinside will present in details the draft final report of the Special Parliamentary Committee on financial, economic and social crisis.