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.

Eurozone good governance, transparency and democracy

As long as the self-proclaimed leaders of the eurozone reject democratic and sufficient powers at European level, efforts and rumours will concentrate on artificial and ineffective solutions to the euro crisis.

The next European Council (summit) is coming up 9 December 2011, but our national leaders never seem to have the time for a democratic European Union, although they always have time for another eurozone failure.

Popular sovereignty, instead of state sovereignty.

Perhaps my ideas about robust structures and legitimate powers are only romantic mush, so we need to check what other euroblogs dealing with the economy and the eurozone have to say.


Ulrich Beck

Ulrich Beck has understood that the crisis of the euro is not only about money. A Europe of bureaucracy should be turned into a Europe of citizens, he says, before launching a number of test balloons.


Jean Quatremer

Jean Quatremer sees chancellor Angela Merkel as a strict disciplinarian, who refuses to budge on illimited ECB intervention, eurobonds and progress to a federation. Possible treaty negotiations at the 8 and 9 December 2011 summits will only aim for more rigorous budget discipline. On the Coulisses de Bruxelles blog, Quatremer wonders if the markets will be as equanimous as the German chancellor.


Jean Pisani-Ferry

On Bruegel, Jean Pisani-Ferry writes that it is again Germany's best interest to ensure lasting stability in Europe. However, what is likely to emerge from the current negotiations is another layer of largely ineffectual sanctions procedures. Boldness is needed: mutual guarantee and veto powers.


Place du Luxembourg

The Place du Luxembourg blog says that a break-up of the eurozone would be a bad alternative and then proceeds to calm spirits, believing that the issues will be sorted out.

For instance, Wolfgang Münchau was less serene. So are Moody's, the OECD and MarketWatch.

According to Reuters the ”EU summit on Dec. 9 [is] increasingly seen by investors as possibly the last chance to avert a breakdown of the single currency area.”


Herman Van Rompuy

The president of the European Council, Herman Van Rompuy, sent us the following reassuring tweet:

euHvR Herman Van Rompuy 
At 9 Dec. European Council I'll present a roadmap on how to strengthen economic union of the euro area commensurate with our monetary union

I appreciate the good intentions, but wonder when the trillion dollar questions at European level will be prepared according to (at least) the standards of a municipal decision about building a public toilet, so my reply contains a few implicit questions:

RalfGrahn Ralf Grahn 
@euHvR Public would appreciate proposals to discuss and evaluate well in advance (good governance, transparency, democracy). #EUCO

Should we believe the European Economic Policy blog, which said that Euro bonds won't work without a political authority that backs them up, but continued that we have seen over the last week that the EU has no intention of establishing such a government?

Save or no save, is this sustainable?



Ralf Grahn

Germany: CDU's next steps in euro crisis

We have looked at some of the differences between Germany and Britain in European politics: the CDU party conference, European values, British Europe as an alternative and Ireland as a risk to much more than treaty reform.

How does the CDU understand the euro crisis, and what does the party propose for the immediate future?


Stability and growth pact

After defending the European values, explaining the benefits of the European Union and the necessity of the euro currency, the resolution adopted by the Christian Democratic Union CDU proceeded to scorn the previous red-green coalition for letting Greece into the eurozone and for failing to meet the Maastricht criteria during four consecutive years, weakening the stability and growth pact (SGP) and the respect for Germany.

Some countries have lived beyond their means and become indebted. They have failed to enact structural reforms in order to become competitive, and their enterprise sectors have been too narrow, based on construction or financial services.


Stability union

The CDU rejoiced that first steps towards a stability union had already been taken [two years into the crisis, my addition]. These are then duly noted: advance budget control (European Semester), strenghtened SGP, rescue packages for Greece, and the establishment of the EFSF to be replaced by the permanent European Stability Mechanism ESM.


Euro Plus Pact

The CDU resolution Starkes Europa – Gute Zukunft für Deutschland underlines that solidarity requires massive reforms for stability and competitiveness in countries needing help.

The Euro Plus Pact is seen as an agreement among 17 eurozone leaders and six other EU members to strenghten the economic union in the EMU, by increasing competitiveness.


Immediate tasks

The resolution set the following immediate tasks within the framework of the Lisbon Treaty:

1) Adopting a constitutional rule for budget balance (Schuldenbremse) of the German type in every euro area member and as a requirement for eurozone entry.

2) Adherence to the rules of the stability and growth pact (SGP) by reduced spending, structural reform and sustainable growth. The structural funds should be focused even better.

3) Each state is responsible for its own finances. Rejection of transfer union and of automatic liability.

4) Rejection of eurobonds.

5) CDU defends the independence of the European Central Bank (ECB) and the Deutsche Bundesbank. Strict separation of monetary policy and economic policy. EFSF reform will allow the ECB to end the purchase of state bonds.

6) The debt crisis must lead to adequate regulation of financial markets and institutions.

7) Global regulation of financial institutions is necessary.

8) CDU wants a global, EU-wide or even a eurozone-wide financial transaction tax (FTT).

9) The CDU wants the European People's Party (EPP) to field a top candidate in the election to the next European Parliament.

***

Beyond the immediate tasks, the CDU sees the need to complete the economic and monetary union (EMU).



Ralf Grahn