(ANSAmed) - BRUSSELS, JANUARY 31 - The European Union has
reached a deal on a new budget pact, reinforcing discipline with
rules of common rigour imposed on accounts and growth, but has
taken a hit along the way and remains divided on how to resolve
the Greek crisis once and for all. The agreement on the new
"fiscal compact" was reached following hasty negotiations, but
only by 25 member states. With the UK ruling itself out of the
agreement from the start, the Czech Republic surprisingly
decided that it would also not sign the deal, but said that it
could change its stance. The concluding statement on growth and
employment, meanwhile, was approved by all parties, with the
exception of Sweden, whose Prime Minister is leading a minority
government and "for parliamentary reasons" was unable to sign
the deal. All 27 member states, however, signed the agreement
on the new European Stability Mechanism. "The 25-state
agreement is a great result, considering that the EU is made up
of 27 member states," said the EU President, Herman Van Rompuy,
who was satisfied with the outcome. Also happy at the deal was
the President of the European Central Bank, Mario Draghi. "The
fiscal compact is the first step towards the fiscal union,"
Draghi said. "It will certainly strengthen confidence in the
eurozone". Greece's difficulties in reaching an agreement with
private creditors and the storm caused by the German document
demanding a de facto appointment of an external commissioner in
Athens have taken on the role of the elephant in the room, with
the issue discussed "informally" by leaders at dinner. "I am
absolutely against this idea of a commission, whose only aim
would be to supervise Greece," said Jean-Claude Juncker, the
Prime Minister of Luxembourg and president of the Eurogroup.
The Austrian Chancellor, Werner Faymann, meanwhile, called the
German proposal "oppressive". Italy's Prime Minister, Mario
Monti, and the French President, Nicolas Sarkozy, were also
against the move, while moderate backing to Berlin was given by
the Netherlands and Sweden. "We want a global deal [on
Greece]by the end of the week," was the reaction of the
President of the EU Commission, José Manuel Barroso. At the end
of the summit, Juncker, Barroso, Draghi and Van Rompuy held
talks with the Greek Prime Minister, Lucas Papademos, to analyse
the situation of talks with private creditors and on the second
aid package of 130 billion euros. The "fiscal compact" means
that budget balance becomes a "golden rule" for the EU. With
the acceptance of the new pact, the 25 signatories are agreeing
to insert the obligation for account balance into national
constitutions or equivalent laws and have committed themselves
to "semi-automatic" sanctions to be triggered if the measures
are violated. Countries with debt beyond the ceiling of 60%
fixed by Maastricht have also promised a repayment plan of 1/20
every year, but taking into account the mitigating
circumstances, as requested by Italy, of the six-pack - the
package on new economic governance. The deal for the new pact
was held up for a few hours by Poland, which - with opposition
from France - asked to participate in all Eurogroup summits. A
compromise satisfying Warsaw eventually prevailed, but was not
enough for Prague, which also has problems of cohesion within
its government. Leaders meeting in Brussels, which was brought
to a standstill by the year's first snowfall and by a general
strike against austerity, also approved the creation of the
permanent rescue funding programme, the European Stability
Mechanism, which from July 1 will replace the provisional
European Financial Stability Facility (EFSF), but for which a
decision on resources has been put back to the summit on March
1. Germany wants endowment of 500 billion for the fund, but
other countries, including Italy, want at least 750 billion, as
do the European Commission and the IMF.
As stated in the official agenda for the talks, growth and
employment were also discussed as financial stability and budget
consolidation are considered "necessary conditions for growth,
but not sufficient". In concluding statements at the end of the
summit, leaders said that "more must be done for Europe to
overcome the crisis". Belgian unions did their bit to remind
those present that austerity is not the only forward,
symbolically presenting the first Eurobond to heads of state and
of government. Meanwhile, the President of the European
Parliament, Martin Schulz, repeated his demand for the immediate
introduction of Tobin Tax on financial transactions. Barroso
presented a detailed report on the next challenges for growth
and employment, which was heavy on arrows and graphics, but thin
on the ground in terms of resources. Brussels is ready,
however, to accelerate the commitment of European funds still to
be spent. The war-chest of 82 billion euros by 2013 - 8 billion
of which will go to Italy - will be allocated for the creation
of jobs, especially for young people. The President of the
European Commission also proposed that a team of European
experts should be sent to Italy and seven other countries with
high unemployment rates, including Greece and Spain, in order to
work with governments and unions to assess employment projects,
with the help of unspent EU funds. (ANSAmed).
