Stability Pact reforms mean more Eurozone wide co-ordination
Bulletin 2 – 7 September 2004

Main points:

1. Stability Pact reforms mean more Eurozone wide co-ordination
Reforms to euro rules are one step forward and one step back

2. New polling on EU Constitution
Opinion polling shows importance of swing voters’ views on Europe

3. Commissioner’s call fuels pressure for asylum reception camps.
Controversial Commissioner defends plans for reception centres in Africa

4. French Socialists set date for Constitution decision
Debate continues over whether to back “flawed” deal or not

5. Denis MacShane’s spin on Charter of Fundamental Rights
Europe minister’s contradictory article in Le Monde backfires

6. Making the progressive case for EU reform

Centre for a Social Europe launches with case against the Constitution

1. Stability Pact reforms mean more Eurozone wide co-ordination

Following years of uncertainty, Monetary Commissioner Joaquin Almunia this week announced proposals for the reform of the EU’s Stability Pact - the rules which govern the euro - to create "better synergy between growth and fiscal discipline".

The main elements of the proposal are:

· Shifting debt surveillance onto medium/long term sustainability

· Allowing for more country-specific circumstances in defining the medium-term objectives of "close to balance or in surplus".

· Considering economic circumstances and developments in the implementation of the Excessive Deficit Procedure.

· Ensuring earlier actions to correct inadequate budgetary developments - peer pressure for budget cuts in good times.

In a statement aimed at encouraging closer economic co-ordination within the Eurozone, the Commission added that it, "considers that economic policy coordination should be strengthened through the more active use of the Broad Economic Policy Guidelines. Peer pressure and early warnings could be more actively used for surveillance within that framework."

Some economists are concerned that reliance on peer pressure leaves the Pact a weaker implementation mechanism. The Bundesbank has hit out at the reforms, saying that they are, "of the opinion that the proposed changes will not strengthen but weaken the stability pact". Thomas Mayer, European economist at Deutsche Bank said, "If it leads to the notion that rules are not fixed but like jelly, then this would create a risk to economic and monetary union itself. . . even if it is a minimal risk, markets would worry. The UK Treasury expressed concerns that budget deficits would continue to be measured each rather than over the economic circle.

Although, in some respects, the move represents a relaxation of the Stability Pact - introducing debt sustainability when looking at member states’ finances for example - it will also mean more sustained pressure to keep government spending down throughout the economic cycle. This reform package is a step forward and a step back.

2. New polling on EU Constitution

Pro-euro think tank, the Foreign Policy Centre, published an extensive opinion poll this week, carried out by Mori. The poll highlights the fact that the referendum on the EU Constitution can still be won by either side. When asked their views on the Constitution, the euro and the EU, around half of respondents said that they didn’t have a strongly held opinion. But despite the Government’s strong pro-Constitution stance, a majority of Labour voters say they intend to vote no.

The poll also highlighted how multi-layered the debate over Europe is. While a majority of voters say that they will vote no on the Constitution (by 50-31) and on the euro (56-36), a decisive majority say they would vote for Britain to stay in the EU by 50 percent to 41.

Voters back our membership of the EU, and that support for being in the EU is higher among those who are wavering over which way to vote in the EU Constitution referendum. Equally, voters know that rejecting this Constitution does not harm our membership of the EU. An attempt to turn the vote into a question of our membership of the EU would be dishonest.

3. Commissioner stands by call for asylum reception camps.

The new European Commissioner for freedom and justice, Rocco Buttiglione has defended his support for the setting up of reception camps for asylum seekers. MEPs have attacked the plan ahead of Confirmation Hearings in the European Parliament. Graham Watson, a UK Lib Dem and head of the Liberal Group in the EP, said that MEPs "have resisted and will continue to resist " the idea of reception camps.

Tony Bunyan, of independent group Statewatch, said, "The language of an immigration ‘time bomb’ and ‘swamping’ usually come from extreme right-wing politicians and racists. The European Parliament might want to question whether these are appropriate views for a new Commissioner responsible for immigration and asylum policy".

The proposals are intrinsically linked with the text of the EU Constitution. Article III-167.2 (g) states that the EU’s new asylum policy should contain, "partnership and cooperation with third countries for the purpose of managing inflows of people applying for asylum or subsidiary or temporary protection." Proposals under the article would be subject to Qualified Majority Voting, so more liberal countries, like Sweden, could be outvoted. Mr Buttiglione’s "freedom, security and justice" Directorate General would be in charge of drafting the Commission proposal that initiates legislation in this area.

4. French Socialists set date for Constitution decision

The French Socialists are to hold an internal party referendum to determine their position on the EU Constitution, with the result being announced in December. The debate continues to divide the party, with senior figures making the case for the socialists to vote no. Former Minister Jean-Pierre Chevčnement said that the Constitution meant "the hope for a flexible Europe has been nipped in the bud" (le Figaro, 25 August 2004), while MP Arnaud Monetbourg said, 'It’s unacceptable' If we approve this text, it will be irremovable for at least twenty years" (Le Parisien, 7 September 2004).

5. French left attack UK Europe Minister over spin

Europe Minister Denis MacShane came under fire last week for an article written in the French paper Le Monde, which contradicted many of his previous statements on the EU Constitution. He argued that the Constitution’s Charter of Fundamental Rights had increased rights for workers despite having said in Parliament, "The EU Constitutional Treaty's social and employment policy provisions are largely unaltered when compared to previous treaties." In a response to Dr MacShane , left-wing French academic, Philippe Marliere wrote, "The French left must say no to a Blairite Europe" by rejecting the proposed Constitution.

6. Centre for a Social Europe launches

The Centre for a Social Europe launched this week with a letter to the Times and the publication of 'Why the Left should reject the Constitution', a pamphlet which sets out the progressive case for rejecting the Constitution. In a foreword to the pamphlet, Swedish Social Democrat MP Sören Wibe said, "We strongly believe in internationalism, but we oppose giving up control. I am delighted that those on the centre-left in the UK have formed the Centre for a Social Europe".

Our launch was covered by a range of media. Radio 4 said, the Centre’s "aim will be to fight for reform of the EU starting with the rejection of the Constitution", while the Times said, "The creation of the Centre, announced with a letter in The Times today, will bring serious opposition to the constitution from the Left." EUObserver pointed out that we, "intend to expand the centre-left argument against the Constitution to other EU member states".


...making the progressive case for EU reform