Thursday

2nd Jul 2020

Both sides claim victory in euro pact ruling

The principal actors on either side of the landmark court ruling on Tuesday (13 July) rushed to place their interpretation on the decision with both sides claiming they have come out on top.

On the face of it, the Luxembourg-based Court handed down a clear victory for Brussels by annulling the decision of finance ministers to suspend a disciplinary procedure against France and Germany for repeatedly breaching the EU's budget deficit limits.

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And the Commission was quick to welcome the ruling.

President Romano Prodi - who took the controversial decision to bring it to court - said that the ruling "confirms the Commission's view as to the respective roles of the Commission and the Council and the application of the stability and growth pact, making thereby budgetary policy co-ordination more transparent and more predictable in the future".

He added, according to the FT, "I am very, very happy".

Balanced ruling

But the ruling was not completely one-sided and there was enough in the Court's decision for member states to claim some sort of victory.

Germany - which this year will have breached the pact's rules for three consecutive years - said that the ruling gave the Council room for manoeuvre when interpreting the rules.

Describing the ruling as "wise", German finance minister Hans Eichel said, "finance ministers are and remain the masters of the excessive deficit procedure", according to German agency DPA.

He added, "We are no closer to sanctions than we were before".

However, political opponents labelled the ruling a "slap in the face" for Mr Eichel.

France - no change to budget plans

A spokesman for the French government - the other main deficit "sinner" said that the ruling "does not place France's budget policy orientation in doubt".

Dutch finance minister Gerrit Zalm - who was the strongest supporter of the Commission during the November spat with member states - also welcomed the decision, saying that the clarification provided by the court ruling was "good and positive".

However, he did describe the November decision to suspend the disciplinary procedure as a "mistake" and hinted that he felt he had been right all along. According to Dutch Radio, he said, "My personal feelings are, well, let's say it's not the worst day in my life".

What next?

Much of the sting has now been taken out of this inter-institutional battle by the relatively balanced nature of this ruling, which has allowed both sides to claim victory.

Moreover, Brussels recently softened its position on the Stability Pact saying that the rules had maybe been too strict in the past and that it would produce proposals to reform the pact that would be debated after the next Commission takes office in November.

And although in theory, the procedure leading to potentially huge fines is back in play, there is almost no chance of the fines actually being levied.

Mr Zalm said that the finance ministers would discuss the implications of the ruling after the summer break and that meeting will take place in a completely different atmosphere to the stormy clash on the night of 25 November last year.

Glossary of key euro pact terms

The language surrounding the EU's Stability and Growth Pact can be highly complex for the uninitiated. Click here for an explanation of the key terms.

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