German Finance Minister Christian Lindner has reacted sceptically to the European Commission’s recent proposal to allow EU states more individual leeway for adhering to the EU debt rules.
This article was originally published in German. You can read the original here.
On Wednesday (9 November), the European Commission presented a proposal to reform the Stability and Growth Pact, a set of common fiscal rules for EU countries. The biggest change: In the future, the application of the rules is to be negotiated individually between member states and the EU Commission.
The core element of the proposal is the negotiation of country-specific plans to bring government spending on a path that allows for continuous debt reduction within a few years. Countries with high debt levels will have four years, while countries with medium debt levels will be given up to seven years to reach such a pathway.
In his first reaction, Lindner was guarded about the proposals.
“There is a great scope of discretion for the Commission,” he told a press conference on Wednesday afternoon. This, he added, will not ensure that the German government’s goals of combining investments in growth and sustainability with the reduction of public debt could be achieved in every case.
“A single monetary union also needs single fiscal rules,” Lindner stressed. “Therefore, there cannot be a unilateral relaxation or creation of additional scope for assessment.”
Members of his liberal FDP party were even more outspoken.
“A regular bilateral negotiation practice between the Commission and individual member states would lead to a dead end in terms of stability policy,” Nicola Beer, who had negotiated the Europe chapter of Germany’s coalition agreement for FDP, said in a statement.
“This would mean the end of any hint of reliability, with fatal consequences: The door for public debt would be wide open, and each new government could renegotiate the rules to its liking,” the Renew Europe MEP added.
Commission proposes more individual debt rules for EU countries
The European Commission presented its proposals to reform the debt and spending rules for national governments on Wednesday (9 November) as individual plans for every EU country, negotiated between national governments and the Commission.
EU proposal disregards German concerns
Already this summer, the German government presented principles on how it thinks the EU fiscal rules should be reformed. Back then, it clearly spoke out against individually negotiated plans between the Commission and member states.
“A bilaterally negotiated individual application of the rules is not a suitable way to further develop the common fiscal framework in terms of greater transparency, higher bindingness and effectiveness,” a government non-paper said.
By proposing precisely that, the Commission is thus disregarding the concerns of its biggest member state.
Commission Vice President Valdis Dombrovskis reiterated while presenting the proposals that “we more or less know where different member states stand on this issue”.
“We believe, having listened to the views of different member states, that the orientations we are proposing today can be a realistic basis for discussions and consensus,” he said.
The Greens in the European Parliament, on the other hand, cautioned that member states’ ideas are diverging and warned against a gridlock.
“Leaving the further course in the hands of the quarrelling member states is problematic and carries the risk of further unnecessary delays,” said Green MEP Rasmus Andresen. The Commission should therefore present a concrete legislative proposal as soon as possible, Andresen said.
Economy Commissioner Paolo Gentiloni also acknowledged this threat.
“There is a risk of deadlock, yes,” he said in the press conference. With its proposal, however, the Commission had made “a contribution to avoiding deadlock”.
“We have to make member states face up to this hypothesis of reform, and I hope that that will happen swiftly,” Gentiloni added. The Commission plans to flesh out the reform proposals with a draft law in the first quarter of 2023.
Dutch government more positive
The Commission has received support from the Netherlands, which in the past had advocated greater budgetary discipline as part of the so-called “frugal four” states.
“We see multiple positive elements that are in line with the Dutch position,” said Finance Minister Sigrid Kaag.
These include, for example, a stronger focus on medium-term targets, specific rules for countries with particularly high debt levels and the use of expenditure ceilings.
“Equally, greater national ownership needs to align with effective oversight to ensure sufficient progress towards debt reduction,” Kaag added.
In the view of the Greens in the European Parliament, however, the reform proposals do not go far enough.
“Especially in economically difficult times, marked by energy insecurity and rapid inflation rates, the Commission should have gone further and sent a clear signal for public investment,” said Andresen.
Omitted from the proposal is a so-called “green golden rule” that would have allowed investments in a climate-neutral economy to be exempted from the spending limits.
The discussion on such a rule had been “quite controversial” among member states, Dombrovskis said, “so we tried to avoid this as a ‘yes or no’ question”. Instead, he said, the Commission had opted for another mechanism, that of country-specific plans.
Looming reform of EU debt and deficit rules: A look at current rules
With the European Commission expected to put forward its ideas for the reform of the much-criticised fiscal rules for EU member states on Wednesday (9 November), EURACTIV takes a look at the current rules and explains why they are criticised.
[Edited by Zoran Radosavljevic]
Source: euractiv.com
