French parliamentarians formulate their ideas for developing and strengthening the European Economic and Monetary Union and the Eurozone in the wake of the economic crisis, which has exposed the fragility of the system.
Observing the incomplete nature of the Economic and Monetary Union, a report by the French rapporteurs concludes that the strengthening of the Union is key to future survival and success.
In the absence of a common budgetary policy, the Eurozone remains an imbalanced and fragile area. The cooperation and multilateral monitoring procedures concerning economic policies, which were implemented in order to encourage the convergence of European economies and to ensure budgetary discipline, displayed their flaws and inadequacies at the time of the crisis.
The seriousness of the crisis and the significance of tensions in the Eurozone have led the heads of state and government to reinforce the institutional structure of the European economic landscape. Improvements such as the establishment of new structures concerning financial assistance, including the European Stability Mechanism (ESM) and the adjustments of the European semester, should be reinforced and, if necessary, rationalized.
Having taken this into account, the rapporteurs consider it necessary to:
- Relaunch an extensive process on the convergence of European economies, including social, fiscal and pay dimensions.
Since the crisis, it has become ever clearer that the desynchronization of economic cycles within the Economic and Monetary Union requires making convergence a priority in the entire Eurozone. The rapporteurs consider convergence to be one of the essential conditions for the stability and correct functioning of the Eurozone and strongly call for greater social, fiscal and pay convergence.
As regards the method, they consider spontaneous convergence to be too limited and are in favor of the introduction of the idea of conditionality. In this respect, the European Parliament’s proposal of setting out a code of convergence regulating Eurozone member states’ access to European financial assistance mechanisms would be an interesting option.
The rapporteurs particularly welcome the positive idea which lies at the base of this proposal, which replaces the more negative notion of an obligatory convergence process (whose efficiency seems limited today) with an incentive scheme.
- Revise and simplify the framework and procedures for both multilateral monitoring and the coordination of economic policies.
The rapporteurs believe that the superimposition of existing rules and procedures hampers the transparency and efficiency of the coordination of economic policies, as well as that of budgetary discipline within the Economic and Monetary Union. The efforts which have been undertaken by the European Commission to simplify and rationalize the European Semester must be continued, and the rules concerning the Stability and Growth Pact must be reviewed. Consequently, the rapporteurs believe that more attention should be paid to growth and to the economic situation. The flexibility of the rules concerning the economic position of the whole Eurozone and of each specific member state should be an important basis for any change in the basic rules which govern the Stability and Growth Pact.
- Complete the Economic and Monetary Union by providing a macroeconomic stabilization mechanism
In the long term, and in the event of a modification of the European treaties, the rapporteurs support the idea of the creation of a true “budget” (or budgetary capacity) for the Eurozone which would supply funds for the financing of common expenditure, in particular for the financing of common investment.
The rapporteurs are strongly in favor, in the short term, of measures which would not imply any treaty changes, such as setting up a European system of unemployment insurance. They underline the need to establish a simple, automatic and subsidiary mechanism and believe that a European system of unemployment insurance would provide the Eurozone with an efficient macroeconomic stabilization instrument which would, amongst other things, contribute to the creation of a Europe with a “social” dimension.
In addition, they also underline the Eurozone’s lack of legitimacy and responsibility and plead in favor of the strengthening of its institutional architecture.
- Put the Eurozone back at the centre of the European political project.
The rapporteurs are in favor of a differentiated integration, at least in the short term.
Differentiated integration would allow the member states of the European Union to progress further down this path, should they wish to do so.
In order to avoid the creation of an “à la carte” Europe, it is necessary for this differentiation to be carried out within a clearly identified and more integrated Eurozone. Nonetheless, this strengthened economic integration must not represent a “closed club”. States which are outside the Eurozone may participate in this strengthened integration process on a voluntary basis if they wish to do so.
The rapporteurs consider the decision of the United Kingdom to leave the European Union to be an appropriate moment to reassert that the Euro must eventually be adopted by all the states of the Union.
- Provide the Economic and Monetary Union with strong institutions
The rapporteurs feel that the setting-up of strong institutions within the Economic and Monetary Union should lead to the strengthening of the democratic legitimacy of the governance of the Eurozone and to the improvement of the efficiency of such governance.
They are in favor of the establishment of a true economic government of the Eurozone, represented by a High Representative for the Economic and Monetary Union, based on the model of the High Representative of the Union for Foreign Affairs. This High Representative would, along with all the member states of the Eurozone, set out a “collective strategy” and would ensure its implementation.
This High Representative, who would be the supervisor and the person in charge of economic and budgetary policies within the Economic and Monetary Union, would ensure that each member state respected the rules which have been collectively laid down at a European level. He/she would encourage economic convergence and would play the role of crisis manager.
In order to carry out this role, he/she would be in charge of an ad hoc administration: the Treasury of the Eurozone.
In the shorter term, the rapporteurs suggest the creation of a stable President position for the Eurogroup.
More generally speaking, the economic government of the Eurozone should have a parliamentary counterpart. On account of the importance of the economic decisions taken at a European level and their potential social consequences, it is essential that such decisions be taken collectively.
The rapporteurs thus call for the setting-up of a “Eurozone sub-committee” within the European Parliament, which would be specifically in charge of ensuring the democratic monitoring of the budgetary capacity of the Eurozone.
Finally, the rapporteurs consider it necessary to strengthen the links with the national parliaments which consider decisions taken in the Eurozone. This strengthening should particularly be reflected in the improvement of the monitoring of governments by their respective parliaments.
Translated from French into English by Assemblée nationale