Thursday

22nd Aug 2019

Brussels decision to take legal action splits EU

The European Commission today decided to launch unprecedented legal action against member states over their effective suspension of the euro rules last November.

Announcing the decision to journalists during the European Parliament's session in Strasbourg, the spokesman for Economic and Monetary Affairs Commissioner Pedro Solbes said that the controversial move was made after a "long and comprehensive debate".

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There was no vote on the issue, as some had expected, although the spokesman confirmed "this does not mean that there was unanimity".

The Commission will now ask the European Court of Justice to rule on a procedure taken by finance ministers last November to avoid disciplinary action being taken against France and Germany for their persistent breaking of the rules underpinning the euro. Brussels believes the procedure was "not appropriate" and has received legal advice confirming this.

The spokesman also confirmed that the Court would be asked to "fast-track" the case, which would mean the issue is resolved in 3 to 6 months rather than one or two years. But it is up to the court to decide whether to grant this.

High risk, high reward

This highly controversial issue has provoked strong - and diverging - reaction across the EU.

The Commission itself was thought to be highly divided during the debate, with commissioners from the bigger countries in favour of letting the case drop and officials from smaller states wanting to push ahead.

Brussels finds itself in an unfortunate no-win situation. If it had decided not to launch legal action, its authority would have suffered, but its decision to go ahead in the courts is likely further to damage relations between the Commission and member states.

This catch-22 dilemma was highlighted by the leader of the Liberals in the European Parliament Graham Watson, who described the move as a "high risk, high reward strategy". He nevertheless welcomed the announcement saying, "Not taking legal action would mean tacitly accepting the decision of ministers to forget their responsibilities and throw out the rule book".

The Parliament's largest political group, the European People's Party, also welcomed the action as it showed that "the Commission cannot be blackmailed".

But the leader of the Greens, Daniel Cohn-Bendit described the action as "mere folly", adding, "it won't take us anywhere".

Co-operation, not confrontation

This latter view was, not surprisingly, shared by German finance minister Hans Eichel. Alluding to the many controversial issues on the EU plate, Mr Eichel said, "considering the tasks before the European Union in the near future, it would be more helpful to have co-operation rather than confrontation".

Unexpectedly, he was backed by Austrian Finance Minister Karl-Heinz Grasser. Mr Grasser was one of the most outspoken critics of the ministers' decision to suspend the disciplinary procedure but he said, "I am not in favour of a lawsuit by the Commission ... simply because I think it is the wrong political instrument".

But the other main critic, Dutch finance minister Gerrit Zalm said on Dutch television that he was "very happy" with the decision.

The current President of the Council of finance ministers - the object of the complaint - reacted coolly. Irish finance minister Charlie McCreevey said that he "noted" the decision and that it was a "matter for the Commission".

Businesses condemn

Trades unions and business groups were unusually united in condemning the action. In a letter addressed to Commissioner Solbes before the decision was taken, the Secretary-General of the European Trades Union Confederation, John Monks said, "legal action of the kind envisaged can only make a bad situation worse".

His view was echoed by the Secretary-General of business group eurochambres, Arnaldo Abruzzini, who said, "We think a legal decision is not appropriate to combat this problem which has a vast political dimension".

Next steps

The Commission will now debate ways of modifying the rules that have caused so much trouble recently.

A report due in February will outline possible reforms which may include taking greater account of the economic cycle when measuring deficits and placing greater emphasis on public debt.

Meanwhile, the Commission will carry out its task of economic surveillance of member states.

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