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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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3 EU Parliament votes to boost EuroGroup !

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After EuroZone Paris Summit's succes, Sarkozy calls to "think anew how to re-construct Europe !

"EuroZone and EU Institutional debates pave the way to 2009 discussions on EU Future, including Enlargment, Turkey etc. ?


23 October 2008

After EU Parliament strongly suppported in 3 successive Votes this week in Strasbourg French EU Chairmanship's move to boost Euro-Group at EU's core, while ideas on EU Institutional problems are awaited on December, "it's an open Question now" if this may lead to a debate on EU's Future, or not, told us French President, Nicolas Sarkozy''s Spokesman, Pierre-Jerome Henin.

MEPs voted on Thursday fresh Funds to support EuroGroup, after adopting on Wednesday a Resolution asking a "further Evolution" to "the 1st ever meeting of Heads of State and of Government of the Euro-Zone, taking decisions in that capacity", while earlier this week a Report asked "a stronger Institutional setting" for "EuroGroup", extended from "competitiveness/industry" to "environment, employment and education", with "increased powers for Political decision-making", according to a text drafted by French MEP Francoise Beres and German MEP Werner Langen, "10 Years after the creation of Euro" (1999 - 2009).

- Brussels' subsequent "EU Council ..(simply)..ratified the measures decided by EuroGroup on October 12" in Paris, which "were necessary to contain the current Financial Crisis", Resolution observes, expressing also support to the new process succesfully initiated by Sarkozy and due to be completed by agreements with USA and other countries at a Global level.

From now on, it's between two differend but parallel moves : EU's delay, and EuroZone's acceleration, that Enlargement and particularly Turkey's controversial EU bid, will have to search its way :

Indeed, EU's 27 expect a "Roadmap on how to deal with the Irish problem" on Lisbon Treaty ratification after December, risking to pass even 2009 Elections and next Commission with the old Nice Treaty of 2000, out-dated and unfit even for 2004's Enlargement...

On the contrary, EU's core launches a real "Economic Governance for EuroZone at the highest level of Heads of State/Government" of the 15, which started in Paris on October 12 and was strongly supported this week in Strasbourg by Sarkozy and EU Parliament.
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- "It's a good idea, to launch such a debate ("on EU's Future") in EU Parliament in view of 2009 Euro-Election : Perhaps some MEPs will seize an opportunity", told us mainstream French MEP Alain Lamassoure, former EU Minister and EU Spokesman for France's governing party UMP.

- "All MEPs' debates on such EU Councils are also part of the larger debate on Europe's future : Now with EuroZone, and even more when, on December, Irish Prime Minister is due to table proposals in Strasbourg on how to deal with EU Treaty's ratification", replied earlier to our question EU Parliament's Press Director and Spokesman, Jaume Duch.
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Sarkozy has formally anounced his intention to open EU Debates on Economy, Identity/Enlargement (i.e. mainly Turkey), etc. both linked to a popular Political view of Europe, since his Historic speeches on EU in Strasbourg, on February and July 2007, when he stressed that "Europe needs a New Renaissance". At the beginning of the French EU Presidency, on July 2008, replying to a MEP, he suggested that EU Parliament takes an active part in Debates on EU's Future.

- Now, in 2008, "Crisis are an opportunity to re-think how to re-construct Europe", Sarkozy stressed. At any case, the Historic 1st EuroZone Summit of Heads of State/Government, which started replying to the Financial crisis,"is a Turning Point : After that, Europe cannot be governed as before, but differently" : People "like a Europe with Strong Will".

- "We must make the System move !", "Europe needs Innovation" and free political debates. EU "Elections are in a few Months", Sarkozy warned.

He invited EU Parliament to fully play its role as "the Democratic Heart of the Europe we want : United, Independent and Voluntarist, because the World needs Europe's voice".

- "It's no more possible for Euro-Zone to continue without an Economic Government" at the Highest Level of Heads of State/Government, who provide "Democratic Legitimity" and can take important decisions, he announced, strongly supported by EU Parliament's Economic Committee which just voted to boost the "Institutional" aspects of "EuroGroup".

Plasticity offered by the current absence of a special Treaty on EuroZone's Institutions "made it easy to adapt the organization of the 1st Summit with imagination, to efficiently meet urgent needs", he observed, on the occasion of Brittish Prime Minister's exceptionnal presence at the greatest part of EuroGroup's Paris Summit.

- "In EuroZone we have the same Bank, the same Money, and, thus, a same duty for Unity" : "By bringing together EuroGroup's 15 members States we suceeded to find a solution and prepare a Giant Plan of 1.800 Billion euros", Sarkozy reminded of Paris' 1st Historic EuroZone's Summit.

Afterwards, Brussels' EU Council followed the move, and USA's Paulson II Plan was inspired from that. "Europe must promote the idea of Global Economy's Refoundation", he stressed.

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- "I was frankly astonished when I found, at the EU, a rigid system, where any New Idea was seen from the outset as a sacrilege, while, on the contrary, Europe needs Innovation !", he described.

F.ex. ,"'When we first spoke about the "Union for the Mediterranean", it was misunderstood as something extraordinary.. When later we had the Russia -Georgia crisis, it seemed against EU's custom to act "in the middle of August", instead of staying a passive spectator ! And when, in front of the Financial ciris, we gathered the 1st EuroZone Summit of the "15", some thought of it as a lese-majesté", he denounced.
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On Geo-Political Principles :
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- But, by moving resolutely, "EU obtained the ...withdrawal of Occupation Troops in 2 Months !", reminded Sarkozy, observing that Russia "fulfilled its commitments", in the Georgian crisis, where a "disroportionate reaction" from Moscow followed a "totally inappropriate action" from Tbilisi's troops. "It would be crazy to reply by military means : EU should not become accomplice of another Cold War, imposed by lack of cool heads".. as he said.

In future, "the creation of a common European Economic Area with EU and Russia, would also obtain a raprochment on our Human Rights and Democratic Values", added Sarkozy, in a statement which should logically be applied, a fortiori, to controversial EU "candidate" Turkey..

Particularly when, the same week that EU Parliament voted 2009 EU Funds for Turkey's controversial EU bid, ECHR took a series of judgements condemning Turkey for grave Violations of Human Rights, such as : Torture, death of a political prisoner in unclear circumstances followed by failure to conduct a proper Investigation, "enforced Disappearance" of a youngster aged 17, Killing of a sepherd with Tank Shells, persecuting Journalists for articles on "Missing" People, even a former President of Human Rights' Association, (etc)

- "We (EU) can defend our ideas on respect of Sovereignity and territorial Integrity, on Human Rights and other differences ... without confrontation", Sarkozy stressed, on the occasion of Russian/Georgian conflict, reminding that : "we were only 2 steps from catastroph", when a Peace agreement brokered in Moscow prevented, at the last minute, Russian troops' advance towards Tbilisi.

An EU Parliament Resolution adopted Wednesday in Strasbourg on the occasion of Russia - Georgia conflict, outlines a set of Principle which apply elsewhere too, (particularly when EU Rapporteur for Russia and Turkey is one and same person ; Dutch MEP Ria Oomen-Ruijtanen !)

Clearly rejecting any "military solution to the conflicts", MEPs "condemn ..all those who resorted to force and violence". They denounce a "disproportionate military action", "as well as (an) unilateral decision to recognise the independence" of brekaway regions, "calling.. to respect the sovereignty and territorial integrity" of the concerned country, "and the inviolability of its borders recognised by all EU Member States". They warn that "EU must review its policy towards" a 3rd Country, "should .(it)...not comply with its commitments", and "stress that the withdrawal of.... troops from the areas ....is an essential additional step".

EU Parliament "calls for the safe and quick return of refugees, (accepted by Russian President Medvedev) accompanied by the deployment of EU observers on the ground", and "regrets ...that ..EU Monitoring Mission (EUMM) is not allowed to enter the ...breakaway regions". Moreover, "It's important to ensure that persons and NGOs ..engaged in defending human and civil rights can operate". "Until ...all remaining issues (are) resolved..., and notably the continuing ...Military presence", "relations with the EU ..cannot be fully normalised", MEPS warned.

As nobody likes to be accused to practice "Double Standards", this should be regarded as "Principles" applicable to any Third Country at EU's Neighborhood.. No ?

-------------------

On Economy :

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- "When Financial crisis shook US and EU's Banks, without result from the 1st (American) Paulsen plan, it was the common reply of the 1st EuroZone's Summit, involving some 1800 Billion euros, which started a positive move in the markets, soon strengthened by the follow-up of the US Paulson 2 Plan, noted Sarkozy.

- "Europe should not be only on the defensive, but, if necessary, know also how to take an offensive", he said, brushing away hesitationsto act on Economy: - "I'm for a refondation of Capitaliism, but against Speculators, who betray its values" : "Lack of Rules was profitable to speculators, Not to businessmen !" We must make sure to prevent any such crisis in future". "We, the rest of the World, cannot continue to bear the deficits of the 1st World power without saying anything !", the French President said, applauded by EU Parliament. All this needs "a New Global Governance", on which EU Parliament must debate. That's why "we proposed together with USA, several Summits from mid-November", to which G-8, enlarged to China, India a.o. countries, should participate. UNO's SG; Ban Ki Moon, the IMF, etc.

Financial crisis lowered shares' prices even for healthy companies, sometimes to 1/3 of their initial price, so that strangers might buy EU industries for only a portion of their real value, and Europeans may wake up one day with their main industries sold out to foreigners !

That's one of the reasons for which EU should debate about creating "Golden Shares" for States to jointly take Strategic participations to help European Industries until the end of the Crisis, particularly against distording competition, he suggested, pointing at USA's 35 billion $ plan for American Car Industry."We shall struggle for Europe to be able to build Airplanes, Ships, Trains, Cars, because we need a strong Industry", he concluded.

"F.ex. as we did back in 2004, when as Finance Minister, we bought Alsthom's shares for 800.000 euros, and, after restructuring, we sold them for 2 Millions : Help a company and make money is not so bad"...

As for the UK, "when Ireland announced that it would guarantee only Irish Banks, London City emptied from liquidities in 24 hours : It's the EU which helped to restore the situation, Not the UK alone !", reminded Sarkozy to nationalist British MEP Nigel Farage.

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On the contrary, in a last-minute attempt for the EU to catch-up with its Institutional delay "before the European Elections" of June 2009, MEPs simply voted a call for a "set of proposals" to be made for the "Irish public opinion" at the end of the year...

- "As long as Lisbon Treaty is not ratified by all 27 EU Member States, there is an unanimous decision to stop Enlargement, reminded Wednesday in Strasbourg the French Minister for EU affairs, Jean-Pierre Jouyet..

Added to an indirect but clear warning that, without Lisbon Treaty, all 27 EU Member Countries may not have a Commissioner in the 2009 resuffle, MEPS in the Constitutional/Foreign affairs Committees applauded hoping that this might motivate their Irish friends..

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