EUCO: Fiscal compact TSCG

The fiscal compact, officially the Treaty on stability, coordination and governance in the economic and monetary union (TSCG), was signed yesterday by 25 of the 27 governments of the EU member states. Only the Czech Republic and the United Kingdom chose to exclude themselves at this stage.

The TSCG text is available in the 22 authentic treaty languages (Bulgarian, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish).


A common concern

The recital reminds us of the obligation of all member states of the European Union to regard their economic policies as a matter of common concern. This obligation was introduced by the Maastricht Treaty, which was signed twenty years ago.

Recently, the failure of the states to adhere to and to enforce this obligation has turned it into a grave concern, common to all EU citizens (and beyond).

The TSCG still builds on the principle of national economic policies, which need to be coordinated intergovernmentally, although it purports to shrink the straitjacket.


Treaty law and enhanced cooperation

The aim of the signatories is to incorporate the substance of the TSCG into the legal framework
of the European Union within five years (Article 16). According to Article 10, enhanced cooperation is seen as an option.

This intergovernmental treaty, close to but outside the institutional framework of the European Union, went through six different drafts, which were not officially made public. However, the draft texts were leaked to selected media. Even if selective leaks violate the principle of equality between EU citizens, openness was served.


Ratification

According to Article 14(2) and (3), the TSCG needs to be ratified by at least twelve euro area member states to enter into force among them.

The meaning is twofold. The final number of ratifying states may be less than 25. For constitutional reasons Ireland is going to call yet another national referendum. Other countries may stumble when they try to transpose the changes into national law, although aid from the European Stability Mechanism (ESM) will become conditional upon the ratification of the TSCG.

On the other hand, a few dropouts won't spoil the party for the masochists.


Euro Summit

The provisions on governance (Euro Summit) apply to all parties from the original entry into force. See Article 14(4). The TSCG legalises the recent practice of euro summits, which have eclipsed the Eurogroup, which meets informally but is mentioned in an EU Treaty protocol.


Political alignment

For the non-euro countries, the TSCG is mainly a symbol of political alignment, since they undertake no concrete obligations, if they do not expressly undertake obligations. See Article 14(5). However, according to Article 12(3) they are granted limited participation rights in the Euro Summit.

The TSCG as a whole applies to the eurozone countries, although only a part of the provisions are real additions to the euro area acquis.

The signing of the TSCG took care of the ”austerity” part at the European Council 1-2 March 2012, so the main part of the EUCO meeting could – for a change – be devoted to economic growth, competitiveness and jobs.



Ralf Grahn
speaker on EU affairs, especially digital policy and law

P.S. Between the global issues and the national level, with a tenuous hold on democracy, the European Union institutions and the eurozone coteries shape our future. At the same time we see a European online public sphere emerging. Grahnlaw (recently ranked fourth among political blogs in Finland), Grahnblawg (in Swedish) and Eurooppaoikeus (in Finnish) are among the more than 900 euroblogs aggregated by multilingual Bloggingportal.eu. Are you following the debates which matter for your future? Is your blog already listed on Bloggingportal?

Breaking news!!! ”Van Rompuy bites dog!!!”

At this moment the home page of the European Council is all about the spring EUCO meeting 1 to 2 March 2012, with further pages dedicated to the re-election of president Herman Van Rompuy, the first day of the spring European Council, the euro area leaders on Greece, the Treaty on stability, coordination and governance (TSCG aka the fiscal compact) signed, and day two of the EUCO meeting summed up.

These summaries have links to documents, speeches and webcasts, so technically the communication effort was handled neatly. Under Meetings, I would prefer for the conclusions and the euro statement to link to the page with all the available language versions regardless of the language the visitor happens to use. The link to the TSCG offers an example.


EUCO summary

For the reader pressed for time, the EUCO conclusions begin with a summary of the results:

The European Council discussed the implementation of the EU's economic strategy. This strategy pursues both continued fiscal consolidation and determined action to boost growth and jobs; sustainable growth and jobs cannot be built on deficits and excessive debt levels. The measures taken to stabilize the situation in the euro area are bearing fruit.

The European Council endorsed the five priorities for 2012 set out in the Commission's Annual Growth Survey. It looked at action that has to be taken at national level. Member States must make faster progress towards the targets of the Europe 2020 Strategy and step up efforts on the reforms taken up in the 2011 Country-Specific Recommendations. They are expected to indicate the measures they intend to take to that effect in their National Reform Programmes and their Stability or Convergence Programmes. The European Council also discussed action required at the EU level, pushing ahead with completing the Single Market in all its aspects, both internal and external, and boosting innovation and research.

In the margins of the European Council the participating Member States signed the Treaty on stability, coordination and governance in the EMU.

The European Council set the EU's priorities for the forthcoming G20 meeting and UN Rio+20 Conference, with a particular emphasis on growth-enhancing measures and reforms. It took stock of developments concerning the Arab Spring and set guidance for future EU action to support that process.

The European Council granted candidate status to Serbia.

It agreed that the Council should revert to the issue of Bulgaria and Romania's accession to the Schengen area in order to adopt its decision in September.

Finally, the European Council re-elected Herman Van Rompuy as its President.

Herman Van Rompuy

One of the concrete decisions was the reappointment (formally election) of the EUCO president for two and a half years.

I already noted that president Herman Van Rompuy promised no real change for EU citizens during his second term, during which he will chair the Euro Summit as well. (A post in Swedish on Grahnblawg too about this election of a sole candidate.)

In addition to the draft conclusions (not formally published) and press conference videos, Van Rompuy left a number of speeches and statements as reading for journalists and aficionados of EU politics: his acceptance speech, his statement after the first session of the European Council with the letter S in prominence, his speech at the signing of the of the Treaty on Stability, Coordination
and Governance in the Economic and Monetary Union (TSCG) by 25 of the 27 EU member states, and his positive end note at the conclusion of the summit, even risking a joke about his own (s)election (in French).


Van Rompuy bites dog?

Those who cry out for boldness and charisma are probably driven to despair before Van Rompuy opens his mouth, and they possibly fall asleep before hearing a word.

If ”Man bites dog” encapsulates news, there is little front page headline material to wring out of these addresses.

The structure is clear and the style restrained. In a low key they put chosen policies in perspective and explain the choices made. Their lack of hyperbole makes them more credible than many EU proclamations of yore. The messages seem to be the kind of gentle prodding national leaders want, or at least tolerate.

Are Van Rompuy's interventions and work effective? Can the outcomes be judged now or later?



Ralf Grahn
speaker on EU affairs, especially digital policy and law


P.S. Between the global issues and the national level, with a tenuous hold on democracy, the European Union institutions and the eurozone coteries shape our future. At the same time we see a European online public sphere emerging. Grahnlaw (ranked fourth among political blogs in Finland), Grahnblawg (in Swedish) and Eurooppaoikeus (in Finnish) are among the more than 900 euroblogs aggregated by multilingual Bloggingportal.eu. Are you following the debates which matter for your future? Is your blog already listed on Bloggingportal?

European Council and Euro Summit: Van Rompuy promises more of the same

Habemus what? White smoke rose from the Justus Lipsius building. Without a black ball, both a cabal of 27 and a coterie of 17 political leaders in Europe made it clear that they want more of the same.

Late and almost imperceptibly the selection of Herman Van Rompuy to chair the Euro Summit coterie and the European Council for the next two and a half years had been introduced into the meagre advance information from EUCO to the public.

The selection of Van Rompuy to chair both clubs from 1 June 2012 to 30 November 2014 has now been confirmed.

In his acceptance speech Van Rompuy reminded his backers that ”our duty is to preserve the trust of the citizens in the Union”.

It would have been even better, if he had remembered that we are citizens of the European Union (even if we still lack full political rights).

Can we hope for better governance and more openness? Van Rompuy's thank-you address seems to dash any hope of improvement: ”In my second mandate, I intend to remain true to my style and working methods.”

Despite this, Van Rompuys audaciously speaks about winning over the hearts and minds of the Europeans.

How about democratic reform of the European Union and its institutions? For Van Rompuy democracy becomes a value worth effort right beyond the external border of the EU:

Without exaggerating the means at our disposal, we must act united whenever our interests and our values -- in particular democratic values -- are at stake, in the first place in our neighbourhood. This is where our credibility starts.

In addition, president Van Rompuy reported about the discussions at the first EUCO session. True to his style and working methods, he still did not share the paper he had circulated to the heads of state or government on how to revive growth and employment.

Update 7 March 2012: Through Twitter the Council press office yesterday made an Issues Paper (29 February 2012) available to the public.

Ralf Grahn
speaker on EU affairs, especially digital policy and law

P.S. With a sometimes tenuous hold on democracy, between the global issues and the national level, the European Union institutions and the eurozone coteries shape our future. At the same time we see a European online public sphere emerging. Grahnlaw (ranked fourth among politcal blogs in Finland), Grahnblawg (in Swedish) and Eurooppaoikeus (in Finnish) are among the more than 900 euroblogs aggregated by multilingual Bloggingportal.eu. Is your blog already listed among them? Are you following the debates which matter for your future?

Eurozone governance: Fundamental flaws but better presentation

This blog post continues the discussion in the entries Transparency during the eurozone crises and Euro crises: European Council eviscerated?, based on my speech at the 22 February 2012 Attac seminar about the implications of the new fiscal discipline in the EU. This text contains some modifications, updates and documentary references, complementing the oral presentation.

I am appalled by the crucial role two coteries, the Eurogroup and the new Euro Summit - both meeting informally – play in European economic policy making. I am disappointed in the way the coordinating General Affairs Council (GAC) and the European Council (EUCO) have failed to grow up, despite the possibilities offered by the Lisbon Treaty.

However, every cloud has a silver lining, or there are pockets of excellence everywhere.


Council press office

Since our discussion with the Council press office last November, some things have improved from the citizen's point of view.

Let us follow the paper trail of the Eurogroup and the official institutions to make our case.

The Council press office has recently added a web page called Eurozone Governance, accessible from the Council's front page, as well as the home page of the European Council. This is an improvement, and the contents have been upgraded. We could even say that the presentation has improved a lot (web page Documents).

After the fact, we learn i.a. that the EU finance ministers have agreed to shore up IMF resources by €150 billion (19 December 2011), the text of the Treaty on stability, coordination and governance in the economic and monetary union (TSCG) – also known as the ”fiscal compact” or the ”stability union” - and the text of the Treaty establishing the European Stability Mechanism (ESM) between the euro countries.

Nowadays, there are also articles about the main issues, with helpful links, so the materials are available in one place, in a much more user friendly manner.

The frequency of press releases has also gone up, and the various conclusions, as well as explanatory and official statements have also been posted.


Democratic debate

If presentation has improved, what am I carping about?

Despite better presentation, the fundamental flaws of structure and procedures remain.

The essence of democratic debate is seeing citizens and media as potential sources of input, not just a nuisance or subjects to be informed about the outcomes.

This is where the Eurogroup and the European Council fail miserably, and the Council configurations largely.

Thus, the Euro Summit which combines traits of the Eurogroup and the European Council is hardly a dream prospect with regard to openness.

Ahead of the Eurogroup Monday evening, we had a short statement (14 February 2012) from the president Jean-Claude Juncker announcing the chief reasons for the postponement of the ordinary meeting. The Eurogroup statement (21 February 2012) on the second bailout package for Greece offers the public highlights about the sacrifices of the euro area taxpayers, the private bondholders and the Greek people, but it does not contain any links to the underlaying documents and assessments. We are supposed to take the decisions on trust.

But this is the crux: They don't really have a mandate from me.



Ralf Grahn
speaker on EU affairs, especially digital policy and law

P.S. 1: For better or for worse, between the global issues and the national level, the European Union institutions and the eurozone coteries shape our future. At the same time we see an emerging European online public sphere. More than 900 euroblogs are aggregated by multilingual Bloggingportal.eu. Is your blog already listed among them? Are you following the debates which matter for your future?

P.S. 2: Referring the anti-piracy treaty #ACTA to the Court of Justice of the European Union (CJEU) marks a lull in the proceedings, but not an end to the political battle. A few moments ago, the online petition launched by @Avaaz for the European Parliament (and the national parliaments) to reject ACTA had already been signed by 2,427,532 netizens, but more are welcome until the official burial.

Today, Saturday 25 February 2012, European citizens join forces through more than 150 demonstrations for open and democratic legislation and Internet freedoms. In Finland Stop ACTA Helsinki convenes in front of the Central Railway Station at 14:00 hours.

Transparency during the eurozone crises

On 22 February 2012 Attac Finland and Attac Parliament organised a seminar about the new budgetary discipline in the EU and its implications for socio-economic developments and democracy.

The discussion was kicked off by foreign minister Erkki Tuomioja, who is also the chair of Attac Parliament, and by professor Heikki Patomäki, who is one of the three chairpersons of Attac Finland. Between professor Magnus Ryner, who is a political economist, and the researcher Kenneth Haar, who represents the Corporate Europe Observatory, I made a presentation titled The New Stability Union: Implications for Transparency and Democracy, offering my views from the perspective of an EU citizen.

This blog post and a string of later ones are based on my speech, which I began by asking:

Where are we going in terms of transparency and democracy?

My short answer is: from bad to worse, at least in the short term.

However, some of you might want to know why and how.


Transparency

I'll begin by looking at transparency, or openness, in the European Union, in general, with regard to economic policy and concerning the new stability union, the so called fiscal compact.

The Treaty of Lisbon entered into force on 1 December 2009, so we have seen the new EU ground rules in action for a little more than two years.

The start is quite promising. Right at the top, in Article 1 of the Treaty on European Union, we are told:

This Treaty marks a new stage in the process of creating an ever closer union among the peoples of Europe, in which decisions are taken as openly as possible and as closely as possible to the citizen.

Let us now put ourselves in the role of the trusting citizen, who takes this promise of a maximum of openness and closeness at face value.

Instead of building theoretical castles, he or she takes a closer look at economic policy making and the birth of the stability union in the light of available public information.

During these last two years, no questions have been more central to the economic wellbeing of European citizens than the ongoing multiple crises in the eurozone, the efforts to contain the effects and to return to a path towards economic growth and new jobs.

For the sake of brevity, I am going back in history only to the December 2011 summits. The heads of state or government of the euro area countries issued a statement (9 December 2011), where they announced future action in two directions:

- a new fiscal compact and strengthened economic policy coordination;
- the development of stabilisation tools to face short term challenges.

The statement itself contained main points about the common understanding, but no exact documentary references.

How about the guarantees for openness during the operations to contain and to overcome the crises?


Eurogroup

The informal Eurogroup, where finance ministers meet ”to discuss questions related to the specific responsibilities they share with the single currency”, is at least referred to in a protocol (No 14) annexed to the Treaties.


Euro Summit

The eurozone summits have just been convened without any particular legal basis. The Euro Summit has now been institutionalised, turned into a permanent feature with at least biannual meetings and a permanent president.

The Euro Summit is currently based only on the conclusions of the eurozone heads of state or government themselves (Euro Summit statement 26 October 2011, paragraphs 30-33 and Annex 1), although the so called fiscal compact tries to catch up with reality (Article 12 TSCG).


Good governance and transparency?

We are looking at economic policy making for the euro area, which consists of 17 countries, with a total population of 332 million people (Eurostat) – bigger than the home of the US dollar, with 313 million (US Census Bureau).

What do we have? Now we have not only one, but two informal conclaves preparing and agreeing on crucial issues in the dark, before they give the public a rough outline of what has been agreed (if not formally decided).



Ralf Grahn
speaker on EU affairs, especially digital policy and law

P.S. 1: For better or for worse, between the global issues and the national level, the European Union institutions and the eurozone coteries shape our future. More than 900 euroblogs are aggregated by multilingual Bloggingportal.eu. Is your blog already listed among them? Are you following the debates which matter for your future?

P.S. 2: Referring the anti-piracy treaty #ACTA to the Court of Justice of the European Union (CJEU) marks a lull in the proceedings, but not an end to the political battle. A few moments ago, the petition launched by @Avaaz for the European Parliament (and the national parliaments) to reject ACTA had already been signed by 2,422,421 netizens, but more are welcome until the official burial.

Tomorrow, Saturday 25 February 2012, European netizens join forces through more than 150 demonstrations for open and democratic legislation and Internet freedoms. In Finland Stop ACTA Helsinki convenes in front of the Central Railway Station at 14:00 hours.

EU and euro crisis: Internal weaknesses and unanimity

Some countries are born weak, some achieve weakness and some have weakness thrust upon them. The United Kingdom joined the EEC (later EU) late and grudgingly, after its EFTA strategy failed. Britain has worked hard to drag the course of European integration down to its own level, reluctantly agreeing to further steps while opting out of essential policy areas and core groups. Representing a member state seen as playing as much against as for its team, prime minister David Cameron is and has thrust himself into the position of being an obstacle, a nuisance or an irrelevance.

However, weakness is not confined to Britain. The European level is a shining example. The less than robust and democratic structures of the European Union and the eurozone are root causes of the worsening euro crisis. Given the structural weaknesses, calls for more or better leadership often have a hollow ring.

Yesterday we looked at the eurozone ”institutions” with regard to economic policy; informal gatherings with the Euro Summit as the icing on a cake of impotence.

A few days ahead of the European Council, there is no public proposal from president Herman Van Rompuy (who is also the president of the Euro Summits, and has been mandated to propose solutions). An apt illustration of the state of EU and eurozone level power, governance and transparency.

Through the feebleness of the European level, common solutions become hostages of national perspectives and power struggles, since fundamental remedies need unanimity among the EU members or participating states.

Never underestimate internal weaknesses as an explaining factor in intergovernmental Europe.

However chancellor Angela Merkel and president Nicolas Sarkozy patch up their mutual differences on Monday in Paris, the next ”comprehensive solution” requiring unanimity will be met by 25 other national lists of caveats at the European Council 8 to 9 December 2011 (somewhat fewer if the serious talks are restricted to the euro area members or a core within the core).

Does this have the look of credible structures and convincing solutions to the euro crisis, based on democracy at the right level?



Ralf Grahn

Eurozone: Cameron can watch and hope

UK prime minister David Cameron is not in an enviable position. If the euro crashes, the troubled British economy would take a severe turn for the worse. The United Kingdom has to hope that the leaders of the eurozone finally get their act together next week.

This means deeper integration among the 17 euro area countries, or at least a core within the core, since the UK itself is among the reasons why significant progress among 27 EU member states is a utopian vision.

The kind of protectionist eurozone the French president Nicolas Sarkozy has in mind would undermine European economic integration based on open external and internal markets, common competition rules, free movement and Schengen, but Britain has placed itself off-side.

Caught by UK opt-outs and constant obstructionism, the new-fangled referendum lock, secessionists in his own party, campaigning anti-EU media and hostile public sentiment, Cameron is in a position of weakness. He can only offer the well-meaning advice of a bystander, after lunch at the Elysee Palace in Paris (BBC News):

"In the end, what that is about is convincing the markets that the institutions of the eurozone will defend and promote and protect the currency with everything they've got," he said.

Eurozone institutions?

What are these eurozone institutions (within and alongside the institutions of the European Union)?

With regard to economic policy we have the informal Euro Group enshrined at treaty level, i.e. president Jean-Claude Juncker and the finance ministers of the 17 eurozone members. Formal decisions have to be taken by the EU institutions (Council) or intergovernmentally.

The eurozone war chest, struggling to find sponsors to provide leverage, is the European Financial Stability Facility (EFSF), a company registered in Luxembourg. The temporary EFSF should be supplanted by the permanent European Stability Mechanism (ESM).

The European Council 23 October 2011 and the Euro summit 26 (27) October 2011 have now instituted the Euro Summits as a regular feature, with Herman Van Rompuy as the first president. This is the cabal the French president wants to turn into the ”government” in his own image for eurozone convergence, including tighter rules on work and tax.

According to the EU Treaties, monetary policy is conducted by the European Central Bank (ECB), restricted by its inflation-fighting mandate and limited scope of action compared to lenders of last resort.

The eurozone needs deeper integration and ground-breaking action, but David Cameron can mostly watch and hope.



Ralf Grahn

UK views on eurozone decisions

What has actually been agreed in the eurozone or EU27 this far in response to the crisis in the eurozone, which has turned into a crisis of the euro itself? A while ago I collected the main documents in a blog post with brief descriptions.

A more detailed hearing has recently been published by the UK House of Lords Select Committee on the European Union: Inquiry on European Council of 23 October 2011 and the Euro Summit on 26 October 2011 (26 pages).

On 8 November 2011 David Lidington MP, Minister for Europe (Simon Manley, Director, EU Directorate, and Victoria Dean, Head of EU Strategy Department) gave evidence to the EU Committee.

Britain is one of the ten members still outside the eurozone and one of only four EU member states outside the Euro Plus Pact.

Being outside does not protect the UK economy if the euro area economy crashes, so the government of Britain hopes that the eurozone can solve the problems which require further fiscal and economic integration.

Naturally the risk of UK isolation was on the mind of the participants, so the integrity of the single market is seen as important.



Ralf Grahn