Tuesday, July 13, 2004

Curioser and curioser

This morning’s ECJ decision seems to have flummoxed many people. The clearest comment so far has come from Professor Tim Congdon, the author, most recently of Will the EU’s Constitution Rescue its Currency?, published by the Bruges Group this week. His reading of the situation was that the decision reveals a power vacuum at the heart of the “project”.

If, as the ECJ has decided, the Commission had no right to take the matter of the Council decision to court, then who does have that right? And if this was an irregular appeal, why did the ECJ, having decided on that, go ahead and make a decision on the substance of the matter, anyway?

Then again, if these decisions are left to the Council, will they ever be taken? The Council decides by QMV. How likely is it that the larger delinquents will allow any penalizing decision to go through? And if the larger countries cannot be disciplined, how are the smaller ones to be made to jump through the hoops?

Even supposing the decision is taken: how will it be enforced?

Meanwhile, other commentators interpret the decision any way they want to. This is, presumably, how the Delphic Oracle worked. Most of the British media has decided that as the ECJ has said that the rules must be obeyed, this is a victory for the Commission.

The Commission appears to be less enthusiastic. Perhaps, it noted the fact that its right to take the Council to court over the Pact has been disallowed. Its somewhat mealy-mouthed comment is:

In particular, the Court ruling confirms the Commission’s view as to the respective roles of the Commission and the Council in the application of the Stability and Growth Pact making thereby budgetary policy coordination more transparent and more predictable in the future.
The Commission’s press release also tries to clarify the situation as it now stands:

As the ruling states, the Council’s conclusions of 25 November are thereby annulled. The situation prevailing at the moment is the one of the 24 November. The Council recommendations under Article 104(7) adopted for Germany and for France remain the only legal text valid. The Commission in cooperation with the Council will consider how to ensure a satisfactory resolution of the budgetary problems of these two member states within the framework of the Stability and Growth Pact.
Not exactly full of joy, is it. The Commission does, under the ruling, have the right to recommend yet again excess deficit procedures, but has already announced that it is likely to review the stringent rules. This will not be welcomed by the smaller countries, who feel that they have had to work very hard to keep their deficit within the allowed limit, while France and Germany can ignore them in a cavalier fashion. And the new Commission President will be from one of those small countries, who has already had a great deal of political trouble because of his determination to sort out Portugal’s financial situation.

Meanwhile, the German government has also welcomed the decision, having looked at another aspect of it. Speaking on behalf of the Finance Minister, Jörg Müller said :

"We welcome the ruling by the European Court of Justice. It affirms the legality of the decision by the council of ministers on Nov. 25, 2003."
He then added that “the court also noted that "responsibility for making the member states observe budgetary discipline lies essentially" with the ministers. Which is true. Something for everybody.

To make life even more interesting, the German opposition politicians have called the decision a “slap in the face” for Finance Minister Hans Eichel. The supposedly neo-liberal Free Democrats (FDP) have called it a victory for the euro. Silvana Koch-Mehrin, the leader of the parliamentary group, said that the Commission President designate now has the
"opportunity to demonstrate his independence and commitment to principles, which the German and French government have tried to undermine with their questionable finance policies,".
Just as soon as he works out what it is the ECJ actually said, presumably.

The Deputy Leader of the CDU parliamentary group, Friedrich Metz thought that this was a serious defeat for all those who wanted to water down the Stability Pact. (It seems he does not remember the Growth part of it.)

As they say, you pays your money and you takes your choice.

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