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1st Oct 2022

Fiscal treaty stirs political disputes in EU countries

  • Francois Hollande has pledged to re-negotiate the treaty if he wins (Photo: Francois Hollande)

The Czech Republic's decision to not sign up to a new fiscal discipline treaty given the nod by EU leaders on Monday (30 January) has caused parties in the ruling coalition to lock horns - but the intergovernmental pact is proving controversial elsewhere too.

"This really harms the Czech Republic," foreign minister Karel Schwarzenberg said on Tuesday. "That much is clear to everyone, while our stance is absolutely unclear to everyone," the leader of the Top09 party, a junior partner in the centre-right coalition led by Prime Minister Petr Necas, added.

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Necas' own party, the right-wing Civic Democrats, are aligned with the country's eurosceptic president Vaclav Klaus, who has said he will not sign the pact.

The eurosceptic president already delayed the ratification of the Lisbon Treaty by withholding his signature back in 2009.

Prague's internal divisions were well known to those around the EU negotiating table. "If Schwarzenberg becomes president, maybe things will change," one EU politician quipped.

At a press conference after the summit, Necas himself did not rule out that his country may join the treaty at a later stage - an allusion to the fact that Klaus will step down after March 2013 elections.

But once back in Prague on Tuesday, Necas defended his stance and said Schwarzenberg's statement is "extremely ill thought-out." He noted that the pact is a big step towards a fiscal union - something Czechs did not vote for when they voted on EU membership in 2003.

One of the three reasons Necas gave for his opposition to the treaty was the "complicated ratification procedure."

Referendum calls

Meanwhile, the new treaty has met with calls for referendums in Ireland and Denmark.

Fianna Fail, the former ruling party in Ireland, on Tuesday joined other opposition groups in calling for a plebiscite.

The government itself has asked Ireland's attorney general for a legal opinion, even though the language of the treaty has been crafted so as to avoid referendums.

The opposition has pledged to take the matter to court if the attorney general says a referendum is not required.

Eurosceptic parties on the left and right of the political spectrum in Denmark, a non-euro country which signed up to the pact, have also called for popular votes.

The majority of parliament is in favour of the pact however, while a Gallup poll showed on Tuesday that 56 percent of Danes favour the treaty, with just 27 percent against.

French challenge

In France, the frontrunner for the April presidential elections, Socialist candidate Francois Hollande, is also making waves with his pledge to re-negotiate the treaty if he wins.

Hollande wants an increased role for the European Central Bank, the creation of eurobonds and a European financial transaction tax.

His position has prompted a debate in French political circles about whether the treaty can be re-opened after the current French President Nicolas Sarkozy signs it in March, as expected.

The intergovernmental pact came about after Britain vetoed a change to the EU Treaty proper.

The treaty is widely seen as part of a grand political strategy to enable Berlin to push through measures to raise its contrbution to EU bail-out funds.

According to the Financial Times Deutschland, the plan is to increase the firepower of the bail-out funds from the current €1 trillion to €1.5 trillion.

EU leaders will come back to the money issue on 1 when they meet in Brussels for another summit - the 15th since the crisis began.

Czechs abandon EU fiscal pact, for now

The new EU treaty on fiscal discipline will be signed by 25 instead of 26 member states after the Czech Republic joined the UK in staying out.

Twenty five EU leaders sign German-model fiscal treaty

Germany's vision of an EU of fiscally prudent states held in check by tight budgetary laws and the threat of legal action came a step closer on Friday when 25 leaders signed a new fiscal treaty.

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