The process of launching the “fiscal pact” among the 17 euro-zone countries and the other non-euro E.U. member states to strengthen economic governance will take longer than has been foreseen, according to one of the three members of the European Parliament who have been appointed to sit in the negotiations.
Speaking after the end of the first meeting of the fiscal pact working group Tuesday, Roberto Gualtieri said, “My impression is that this is going to be a longer exercise than imagined by those who organized it,” citing the difference of opinion among the national delegations in the working group as well as the legal detail that remains to be worked out.
A letter by European Council President Herman Van Rompuy outlining the content and calendar for the creation of the fiscal pact foresaw that the new rules could be brought into force as early as March 2012.
The fiscal pact was decided at a dramatic E.U. leaders’ summit Dec. 9 and was meant to be a longer-term solution to the crisis, creating much closer fiscal integration of euro-zone countries and avoiding the kind of fiscal behavior that led to the current debt crisis.
The pact was vetoed by the U.K., leading to an intergovernmental agreement by the 26 remaining E.U. states.
This creates legal problems for the agreement, because it doesn’t immediately allow for the use of E.U. institutions to monitor the new rules, as it isn’t a new treaty among all 27 E.U. countries. E.U. lawyers have been hard at work trying to resolve this.
A second European Parliament representative on the working group, which brings together more than 100 people, Guy Verhofstadt, raised serious concerns about the use of the European Court of Justice in the process of automatic sanctions against countries that break the fiscal rules enshrined in the intergovernmental pact.
“You shall see in the agreement that they use to enforce the debt brake article 273 of the Treaty. For those who are following the matter, that has never been used in 60 years of European history,” Verhofstadt said.
Article 273 of the Treaty allows countries to take one another at the European Court of Justice. The European Commission, the E.U. executive arm, has said that the problem of enforcing the new agreement could be resolved through use of this article.
Elmar Brok, the third European Parliament reporter, said the good news was all the non-euro countries apart from the U.K. continued to support the new fiscal pact.
“At the moment all nine are still on board and declared determination to stay on board,” he said referring to those nine countries that are part of the E.U. but do not use the common currency.
The three European Parliament reporters also said the working group had briefly discussed the idea of introducing a “sunset clause” to the new agreement.
A sunset clause would foresee a date for the fiscal pact to lapse. The goal would be that by that date, the stricter rules included in the fiscal pact would have been adopted as E.U. primary legislation, making the intergovernmental agreement redundant
EasyForexNews Research Team