The French Budget and « Europe ».

 

The commentaries covering the visit of French ministers to Berlin, in particular those concerning an agreement aimed at avoiding the rejection of the French budget by the Commission, contain premises likely to weaken the EU even further.

 

These pronouncements are reaching new heights of stupidity and incoherence, for example under the pen or in the mouth of those who judge that a slowing of the German economy constitutes a “welcome opportunity”!

 

They also express a profound contempt for the treaties: it is not up to two countries, however important, to impose the correct appreciation of the Members budgets on the Commission. It is the exclusive prerogative of the latter to analyse, evaluate and make appropriate recommendations to all the signatories of the Budgetary Treaty who should either endorse or reject them by a qualified majority.

 

The implicit arrogance of the belief that a Franco-German deal should be binding on the Commission carries heavy consequences: it downgrades the Commission to the status of a “General Secretariat” of the Council, an objective contradicting President Junker’s ambition to reinforce its political clout; furthermore, it excludes the Parliament from the debate.

 

In addition, it recognises the right of a Member State to interfere in another’s affairs: this is hardly a freely accepted transfer but rather a deliberate “violation” of national sovereignty.  If there appears to be a consensus around the need for a “European economic policy”, it is hard to see how France can negotiate bilaterally structural reforms against a German investment program and consider that, as a result, the Commission must approve the French budget.

 

There is also the greatest uncertainty surrounding these “investments”. One pretends that the new Commission has readily available the €300 billion proposed by President Junker. In order to have the necessary impact it is necessary not only to specify the origin of the funds but also who will guarantee and distribute them: it would be helpful to tie the allocation to specific criteria allowing, for instance, the orientation of projects to France to the extent that it meets its structural reform commitments. That would seem more efficient than believing that investments financed by the German budget would have any immediate trickle down effects of the French economy.

 

Indeed, stimulating growth by reforming “European economic policies” can only occur to the extent that this “Europe” is endowed with the necessary resources, an option that was categorically refused for the next seven years during the “2014-20 Financial Perspectives” negotiations in 2013.

 

Once again this episode becomes the latest emblematic example of the need for a federal EU/EMU if any sensible coordinated “European economic policy” is to be carried out and the implosion of the single currency avoided.

 

Brussels, 21 October 2014

 

Paul N. Goldschmidt

Director, European Commission (ret.); Member of the Steering Committee of the Thomas More Institute.

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