Tuesday

4th Oct 2022

'Leaders putting national interest ahead of Europe,' says EU Parliament

  • Parliament blamed leaders like Sarkozy and Merkel for failing to take the necessary decisions (Photo: Council)

The centre and left of the European Parliament have robustly condemned the outcome of the European Council, complaining that the interest of the bloc as a whole has been sidelined in favour of national interests.

It is common for the groups in the parliament to criticise the results of European summits, but the missives issued the afternoon following the meeting were abnormally trenchant.

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The Party of European Socialists "condemned" the result, attacking the "conservative leaders" who hold a majority in the Council.

"The Conservative leaders are fundamentally mistaken. Yet again they have failed to take control of the crisis," said Poul Nyrup Rasmussen, the former Danish prime minister and leader of the PES. "The reaction of the Markets illustrates this clearly."

Mr Rasmussen pointed to the overnight downgrading of Irish bonds by the Moody's credit agency as signifying that the investors were unconvinced by the council's plan. He warned that the EU Council had put itself in "direct conflict" with the parliament over its refusal to countenance any move towards debt issuance at the EU level.

"The German, British, Swedish and Dutch Governments formed a roadblock to progress on the eurobonds issue. So blatantly putting national interest before European recovery is short-termist and lacking in leadership," he said.

"It sends one message to the markets: you can keep picking us off one by one."

The Liberals in the parliament were hardly less scathing, with leader Guy Verhofstadt, also a former Belgian prime minister, saying that while it was a step forward to provide "the legal basis for longer term solidarity and stability ... more complementary measures will be needed to stabilise the euro and calm the markets."

The new permanent rescue fund is "only one part of the puzzle", he said.

"EU leaders may well be hoping that adjusting the wording of the Treaty is sufficient but this will not absolve them from taking a bolder, global approach in the near future leading to three concrete reforms," he continued.

Specifically, the Liberals want automatic sanctions for excessive deficits, a eurobond market and fiscal union - common fiscal decision-making - across the bloc.

The European Parliament must be consulted on the treaty change, but it has no co-decision power under the 'simplified revision procedure' - the new method the EU leaders are using to deliver the limited treaty change while avoiding any national referendums.

But, depending on the fine print of how the permanent bail-out fund is constructed, it may have approval powers.

The EU prime ministers and presidents at the summit did not take any decisions on the details of the fund.

According to a parliamentary legal expert, if the European Council itself develops the mechanism on an 'intergovernmental' basis, and the fund is similar to the existing €440 billion rescue mechanism, which involves a series of loan guarantees by member states, then the chamber will only be consulted, as with the treaty change.

But if the EU is asked to develop and present a proposal, or if it involves any direct EU funds as well as national loan guarantees, then "this is part of the community method, and the parliament has co-decision powers".

The Greens also said that the permanent crisis mechanism "will not be enough to get Europe out of the crisis."

Co-president of the Greens, German MEP Rebecca Harms, attacked her own prime minister, as "blinkered" saying: "Today's summit, under pressure from a blinkered German chancellor, has simply kicked the can down the road again and failed to offer a definitive and urgent response to the Eurozone crisis."

"With the very survival of the euro at stake, we need urgent measures to prevent the contagion from spiralling totally out of control," she continued. "Against this background it is dumbfounding that Chancellor Merkel continues to resist the logical call for eurobonds to buttress the Eurozone, as well as increasing the crisis funds available."

Market commentators appeared to back this line of reasoning.

Senior economist with ING Bank Carsten Brzeski called the summit result "window-dressing" that "does not solve the current crisis."

"Debt restructuring, a common eurozone bond or an increase of the European Financial Stability Facility? None of these issues have been addressed. But they have to be," he said.

"The last EU summit of the year will not have been the last crisis managing summit. It looks as if EU leaders will need to meet again sooner rather than later."

Exclusive

EU officials were warned of risk over issuing financial warning

The European watchdog for systemic economic risk last week warned of "severe" threats to financial stability — but internal notes show top-level officials expressed "strong concerns" over the "timing" of such a warning, fearing publication could further destabilise financial markets.

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