Diplomatic Economic Club® Since 1997
LV EN RU News Trade Fair Riga Members area Articles
  • Contact ☰ menu ✕

    The Baltic States would face even more stringent control in future  

    Some new signs have appeared in approaching economic governance in the European Union. They have been revealed during the European Council summit that took place in Brussels (4-5 February, 2011). It is about additional intergovernmental approach to national economic and financial policies.
    Eugene Eteris, Baltic course

    Some say, that the EU economic governance will cure all the Unions ills. Probably. The question is how to achieve this „governance“ for both the eurozone and the rest of the Union member states. The existing „community method“ is clearly not enough; therefore Germany and France suggested something else: more intergovernmental control and cooperation. German government hopes that balanced budget laws at national level; including changes in constitutions (if necessary) will be the only solution.  

    Unequal partnership: widening gaps

    Plans for further European integration have been again re-assessed in Brussels at the EU summit (4-5 February 2011). The problem is that economic issues are difficult to resolve due to the simple fact: there are different levels of development in the Union.

    Macroeconomic imbalances among the EU-27 are great: some eurozone states are highly competitive (Germany) while others are not (Portugal, Greece, Ireland); these countries are at very critical situations in finances too.  

    Probably the most difficult problem in the EU is an ever widening gap between strong and week member states.

    Another „gap“ is between the eurozone 17 and the „rest of the EU-10“. It is a failure to admit that 17 members using euro had much greater rights and responsibilities than the remaining 10 members, argued the summit participants.

    National budget laws as a remedy

    It seems that major eurozone partners, e.g. Germany and France have little respect for a revamped Stability & Growth Pact, which was discredited by the two states governments in 2003 violating the Pacts main principles of public debt and budget deficit.

    German government presently has another solution instead: underlining the importance of balanced budget laws at the member states level. This idea, if implemented fiercely (including even constitutional amendments, if necessary) would help to cure both eurozones and the whole EUs ills.

    Some argue that the biggest problem is that monetary union is functioning without an economic union. For example, Jacques Delors, former president of the Commission and father of the euro acknowledged on the eve of the summit that there were existing „imbalance between the economic and monetary spheres“ due to the lack of sufficient coordination of member states economic policies.

    Still another aspect of the problem: the EU legislative process, according to German officials, is too cumbersome for eurozone states to reach progress in economic cooperation.

    European pact for competitiveness: German-French plan

    The German proposal sets out a three yardsticks to measure European competitiveness. The first is stability of public finances, i.e. within the Maastricht rules on public debt and budget deficit. The second is stability of unit wage costs as an indicator of price competitiveness. And the third is the minimum rates for investments in R&D, education and infrastructure.

    The pact for competiveness is based on cardinal reform in economic governance. Six main proposals are on the agenda:

    • Scraping wage indexation schemes (common wage system in Europe?);
    • Agreement on mutual recognition of qualifications to promote labour mobility; Common basis for assessment of corporate/company taxation;
    • Adaptation of pension systems according to national demographic trends;
    • Making a constitutional clause in the member states to curb public borrowing and excessive deficits;
    • Introduction of national crisis resolution regimes for banks.
    Thus, the „pact for competitiveness“ is aimed at reaching targets for economic convergence. The trend is in line with the two main countries ideas. For France, it is a long standing demand for „economic government“. For Germany closer economic policy coordination could be better done by finance ministers in 17 eurozone states, rather than through the EU machinery in Brussels. The German chancellor calls it the „union method“, as opposed to existing „community method“, in which the Commission has the sole right for legislative initiative in the EU.

    Some weeks ahead

    During the summit the EU-27 leaders agreed „on the process“ without particular measures. The member state have to agree on details and particulars: measures, objectives and tools will be negotiated. European leaders were ready to give Herman Van Rompuy, the EU president, the task of finding agreed measures at the emergency summit in early March.  

    So, the member states still have some weeks to figure things out

    Full text at the website of The Baltic Course


    Articles »  The Baltic States would face even more stringent control in future »  Views: 4058   Diplomatic Club


    Diplomatic Economic Club



    Home  ::   About Diplomatic Club  ::   DEC news  ::   Cooperation  ::   Publications  ::   Trade Fair Riga  ::   Club archive   ::   Legal  ::   Contact  ::  

    close open

    Diplomatic Club for Peace Appeal to world leaders and humanity

    Diplomatic Economic Club strongly condemns and is not accepting any kind of aggression, military collisions, wars between countries, which are happening here close in the center of Europe, on the other continents of the world, in Asia, in Africa.
    Nothing can justify the use of force in any cases, everywhere it leads to suffering of civilians.
    We call all parts, leaders of all levels for a peaceful solution of any disagreements through the dialog and negotiations.
    Only the Peace on our planet, olny Friendship and mutual understanding promote the life of people.
    Please don't even allow yourself any thought about World War III, about nuclear weapons.
    All the humanity remembers the wars of the 20th century, and if somebody has forgotten, please remember. Diplomatic Club for Peace

    Stop War! Peace All over the World



    Diplomatic Economic Club
    unites members from 37 countries of the world.
    Diplomatic Economic Club is a unique association where people from different countries are to find a common language and contribute to the development of contacts between businessmen of the countries they represent.
    1997 the beginning of the formation of the idea of creating a club, the establishment of internal interactions in the club on the basis of international exhibitions in Riga, periodic meetings.

    Digest

    She phrase Economic Diplomacy assumes the diplomatic official activities that are focused on increasing exports, attracting foreign investment and participating in work of the international economic organisations