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Home arrow newsitems arrow EU's Almunia to EuroFora on Eco Stimulus plans, before London G-Summit : Keep the Rules or Opt-out !

EU's Almunia to EuroFora on Eco Stimulus plans, before London G-Summit : Keep the Rules or Opt-out !

Written by ACM
Wednesday, 25 March 2009
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    EU Commissioner on Economy and Finance, Joachin Almunia, replying to 3 "EuroFora" questions in Strasbourg before next week's London Global Summit, made it clear that all EU Member States must, more or less, respect EU Rules on the Monetary Stability Pact when they draft their Economic Stimulus policies, unless they want to "Opt-out" of EuroZone, as the UK has already done...

  Several EU Countries must correct imbalances in rather strict Time deadlines, and this is not an  "impossible task", but "a very possible and attainable task", as Almunia told us. But it's only the UK which could practically ignore EU's calls, "because of the Opt-out they have"....                                                                                                                                           

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       The issue got a larger, EU-wide and even Global Political dimension, one day later at EU Parliament, when USA's new President, Barack Obama's call on Europe to augment Spending against the Economic Crisis at the eve of G-20 Summit, was considered by some EU officials, (as EU chair, Czech Prime Minister Topolanek or EU Commission's President Baroso, etc), as partly deviant to Euro-Zone rules of the EU, whose priority now seems to be a new, multi-polar agreement on the Regulation of World's Financial Markets, to avoid similar abuses and crisis in the Future.  

 Even if he appeared as partly sparing for the moment some of EU's driving forces, as France or the UK, Spain, etc, who got more Time than others, Almunia stressed that, as a matter of principle, all EU Member States should comply with the same rules, applied according to the particular situation of each one of them.


        The results of EU Commission''s check on 5 EU Countries : France, the UK, Spain, Greece, Ireland and Cyprus, gave, at first, an impression to some that a "difference" was made "between EU Countries", as an Italian journalist said.

        F.ex. paradoxically, Greece seems to have, in comparison, some better indicators than other EU Countries checked this week :

    * Deficit in Greece, after reaching 3,7% of GDP in 2007, is estimated at 3,7% in 2008, over 3% in 2009, and exceeding 4% in 2010, according to EU Commission's forecast, (while the Greek Government tabled on just 3,2%). Only Cyprus does better, with a lower deficit than the threshhold of 3%.

    France comes next, whose deficit aims for 2009 and 2010 were revised upwards at 5,6% and 5,2%. In Spain, it's expected to arrive at 6,2% in 2009 and 5,7% in 2010.

    But in the UK, Deficit estimates mount at ..9,5% in 2009/10. In Ireland, the deficit already reached 6,3% in 2008, and is expected to rise up to 11% in 2009, and 13% in 2010 !

(../..)

 

    * On Growth, Greece "has a higher percentage ..than the EU average", observes EU Commission : "Real GDP Growth reached +4% in 2007, before decelerating at +3% in 2008", the year of the Global Crisis, revealing that "Greece enjoyed a Good Economic period in 2007 and 2008".


    In the other 5 EU Countries, Growth figures are less good, for the moment : Cyprus, after a +1% Growth in 2008, may fall in recession in 2009 with -1%. In Spain, after a + 1,2% GDP Growth in 2008, estimates give a - 2% contraction in 2009. In France, after a +2,2% GDP Growth in 2007, the 2008 estimate was +0,7%. But Ireland's GDP decreased - 2% since 2008. And for the UK, EU Commission forecasts a "sharp contraction" all over 2008-2010.

    - Despite that, Almunia asked  from Greece "to bring the deficit down from 3%" as soon as in 2010, and wants to see efficient measures on October !  And Cyprus is asked to "stop" its Stimulus plan "next year".

    On the contrary, from Spain and France he asks results only in 2012, i.e. 2 Years later, and from Ireland in 2013, i.e. 3 Years later. As for the UK, Almunia replied to "EuroFora"'s question by asking measures only .."when the revival of the economy will allow"...

    This difference made some Journalists (from Italy, France, etc) suspect some kind of "differenciation" between EU Countries :

    - "This gives the impression that there might be a Difference inside the EU between some Big Countries, which get more Time, and some Small Countries, which are asked to comply with Stricter rules", criticized an Italian Journalist.

    - "In Greece, the estimated Deficit is Lower then in the other countries, while Growth also continues". On the contrary, "in Ireland, the Deficit is much Higher, and is due to worsen, because there are more pesimistic forecasts on Growth, with a faster and larger Downfall of production", Almunia replied.

"In Spain and France, the deficits are between Greece's and Ireland's", while revival is still awaited.  Thus, "we (EU Commission) dont' ask the same things" in the other 3 countries as in Greece, which "can move faster".

    But, in fact, the real cause of this otherwise astonishing difference, seems to be an "old problem of  Debt, which exists since Many Years from the Past" (i.e. since previous governments, before 2004), as "EuroFora" asked Almunia, who did not deny : The problem in Greece clearly is that it inherited from the past a gross public Debt which "remained at 98,4% of GDP in 2007", diminished a bit in 2008 (94,6%), but is estimated to grow at 96%in 2009 and 98%in 2010, according to EU Commission's data.

    On the contrary, in Ireland the Debt was only 40,6% of GDP in 2008, and wouldn't breach the 60% reference before 2010. In Spain it's 40,3% in 2008, and 53% for 2010. In the UK it's expected to rise to 70% in 2013/14. In France it's estimated at 67,1% in 2008 and 73,9 in 2009, 77,5% in 2010.

    - "Why this Acceleration in Greece ? It's not only because it has less deficit, and not only because it has a Positive Growth percentage, and, thus, can act earlier, with accessible measures". "But also because there are 2 Facts on which is needed the utmost Care, during this period of (Global Crisis) : An  External Imbalance, with a  big and persisting Current Accounts' Deficit, and also a very big level of Debt, compared to its GDP", Almunia added

    However, the EU Commissioner looked optimist in reply to an "EuroFora"'s question if he believed that "such an old problem, which exists since many years, could be settled in 1 year" :

    - "It's not an impossible task. It's a very possible and attainable task", replied Almunia to our question, reminding that "in a previous occasion", when "Greece had received a recommendation for the correction of an excessive deficit, ..it was corrected", between 2005 and 2007. .And "the Greek Government is convinced that, for their own interest, not only because they want to comply with the EU framework, but for the interest of the Greek Economy, this correction of the deficit is warrant".

    But even Cyprus, whose Debt, estimated at only "49.3% of GDP in 2008, is projected to decline to 44.2% of GDP in 2012", is advised to stop its Economic Revival Plan in 2010, in order to prevent risks imbalances in the future, because of the current Global Crisis' environment.  Asked by "EuroFora" to "explain, in a crystal-clear way", why Cyprus, with a lower deficit than the 3% threshhold and a diminishing debt, according to EU Commission, should take Restrictive Measures now, Almunia focused on the Crisis' impact :

    - "In the case of Cyprus, we (EU Commission) consider that the Fiscal Stimulus should not continue Next Year (in 2010)", he confirmed. Because "we think that the figures on the Economy of Cyprus from 2009 to 2012, ..can become a little bit worse, given the evolution of the (Global) economic Environment". And "Cyprus' Pulic Finances, over the Long term, have problems of Sustainability : We have analyzed that in the Past, and the situation has not changed from the Structural point of view". "At the same time, as Greece, it has a Current Account Deficit, and in this moment, in this (Global) Crisis, the persistence of a current accounts deficit is an important macroeconomic imbalance, that requires the contribution of adequate fiscal policy to be corrected".

    In other words, in itself, nothing new...

    In contrast, UK's particular situation among the 5 EU Countries checked, revealed more clearly the main issue :

    The EU Commissioner was asked by "EuroFora" to explain the "strange example given to other Countries" by the UK, where, despite some negative figures (see above), even if the measures earlier advised by the EU were "not taken", and a Time "Deadline wasn't met", EU Commission does nothing else than simply .. issue a new recomendation, advising again to take more such measures and ..postponing the Time Deadline for later.

    After insinuating that "the UK case", might not be the right, but a "bad example" for other EU Countries, Almunia admitted that he asks from London to simply "correct the imbalances..... as soon as possible, once the recovery will come back" !

    But he explained "the repetition of recommendations in the case of the UK", by observing that "we (EU) cannot go beyond this step, because of the Opt-Out they have"....

    However, it's the "own interest of the British Economy to correct" that, he concluded.
 
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    Indeed, some MEPs  teased, the same day, British Prime Minister Gordon Brown, (who visited Strasbourg to discuss the preparation of the forthcoming Global London Summit), for keeping too many "Opt-Outs" from EU Rules, as fex. the Leader of "Greens/ARE" Group, Italian MEP Monica Frassoni. Going even further British Liberal MEP Graham Watson, leader of the "Liberal/Democratic" Group, launched a call for UK's entry to the EuroZone !..
    
    More pragmatic, French President Nicolas Sarkozy, has already declared that it seems always possile and desirable to forge a special status for the UK to get together with EuroZone. Thus, he reminded the useful, even if partial, participation of Gordon Brown to the decisions taken by the 1st, Historic EuroZone's Heads of State and Government Summit, in Paris, on October 12, 2008, which was the first to be succesful in starting to make Stock Markets move in a positive direction.
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Speaking exclusively to "EuroFora", the New EU Parliament's President, former Polish Prime Minister, ChristianDemocrat/EPP MEP Jerzy Busek, welcomed proposals by EuroFora about innovative ways for EU Citizens to attend EU debates before important final decisions which affect people's lives.

- "We (EU Parliament) must be transparent", Buzek stressed from the outset.  "We must have clear answers also for delicate questions. If we don't touch a problem, you must know why, and when shall we decide in the nearest future".. "Because "we (EU) must think about Europeans, first of all : They don't understand well what is going on in the EU. So, it's our duty to inform them, to make discussions here more interesting".

"EuroFora" congratulated President Buzek for the anouncement he made, from the 1st day of his election in Strasbourg (on Tuesday, 14 July 2009), on his intention to make  transparent debates, exchanges of views, etc. before the final adoption of decisions in EU Parliament's Plenary, when issues are evolving inside Committees, (See earlier publication).

And we reminded, in this regard, that "EuroFora" has been advocating a project for EU Citizens' active involvement in pluralist EU debates before important EU decisions, since more than a Decade : 1997-2007+

- "Thank you. We (EU Parliament), indeed, have exciting debates", Buzek replied. But, in practice, "without a possibility for our Citizens to see them, not even by the Press, the Radio or TV, etc., because it is in Committees", he regreted.

- "But, they (i.e. Media, Citizens, etc) might interact with you, with MEPs, etc, May be we can imagine something", "EuroFora" proposed.

- "Yes, (but) it needs, a quite new idea", Buzed observed.

- "Why not through some innovations ?", "EuroFora" suggested.

- "Innovation ? That's it. Fantastic  New Information Technologies !", Buzek realized.

- "Precisely, "EuroFora" has such a project, since more than a Decade (1997-2009), to use new technologies for public debates before major EU decisions are taken", we reminded.

- "If you have such proposals, please come to us, come to us. We must" do something, agreed the new EU Parliamen's President.

buzek_chairing_400 

    This fits with Buzek's main stance, expressed at EU Parliament's plenary earlier this week in Strasbourg, that the European Union must succeed to overcome a "Crisis of Trust" vis a vis EU Citizens. (See previous EuroFora publication).

    For that purpose, obviously information and debates are valuable, but purely instrumental, procedural means which can help focus on, and highlight a substantial content, attractive to EU Citizens, which needs to be determined by other, political, and not mediatic factors.  

    Buzek spoke about the urgent need to overcome the Global Economic Crisis,  the struggle for Human and Civic Rights, Democracy, etc., the Eastern Partnership, links with Russia, strategic partnership with USA and emerging countries, etc.

    But he also used (while speaking both to "EuroFora" and other Media) the expression : "The Europeans", for EU Citizens. This points right towards what several important EU leaders (including French President Sarkozy, German Chancellor Merkel, etc) have started to highlight particularly during the recent years : That there is a vital need, and an historic opportunity, for the development of a European Conscience, to stimulate e renaissance of a European Identity able to attract Popular support, for the EU to become a strong player in a Multopolar World : In other words, the revitalisation of a project for a "Political Europe".

    By a coincidence, this was indirectly but surely reminded, earlier in Strasbourg, by another ... Busek (this time with a "s") : 

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    Speaking to more than 650 participants from CoE's member countries, at the conclusion of the 2009 Summer University of its Political Schools, Erhard Busek, (with an "s"), former vice-Chancellor of Austria and EU Coordinator for South-Eastern Europe, pointed at the current need to revitalize Europe's "Identity", forged by Greek philosophy and Roman Law, Christian values and Enlightment's ideas, etc. through the ages.     

- "We have almost the same name with Jerzy Buzek (EU Parliament's new President, who is a former Polish Prime Minister), because both our Families come ...from  the same village, located at the Heart of Europe, which was often shared between Poland, Germany and the Czech Republic. But my family emmigrated a long time ago to Austria, while Jerzy Buzek's family remained in Poland", explained f. vice-Chancellor Erhard Busek to "EuroFora".   

 An astonishingly concrete and simple example of European Integration from the grassroots : Starting by EU Citizens, i.e. those "Europeans", that EU Parliament's new President, Jerzy Buzek (this time with a "z"), wants to bring alongside MEP's decision-making proces, (according to "EuroFora"'s main idea : Comp. supra)...

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