MEPs set to air EMU grievances

Date: 06/06/1996

By Tim Jones

IT is an inescapable law of politics that any institution with limited powers wants to extend them while others guard theirs jealously.

This - as Europe's biotechnology industry and those involved in developing transport infrastructures have discovered to their inconvenience - is known as an inter-institutional dispute.

The European Parliament would like its wish to 'have a say' in the events leading up to the single currency in 1999 to fall into this category.

At the moment, the EU's only directly-elected institution merely has a bit part in crafting the coming economic and monetary union in Europe.

During the last Intergovernmental Conference which resulted in the Maastricht Treaty, a handful of Euro MPs complained long and hard about how they had been left out in the cold while 'undemocratic' institutions such as the Council of Ministers called the shots.

Yet member states, mindful that handing over decisions on the conduct of monetary policy to a new supra-national central bank was definitively a matter for their elected governments, chose to give the Parliament only a handful of tasks. These included the right to be consulted over certain appointments and on the least sensitive areas of policy-making, such as the drafting of the annual 'broad economic guidelines'.

A more sensitive issue is the question of the interpretation of the 'convergence criteria' which will determine when EMU will begin and who will be in it - an area where MEPs have no formal right to be consulted.

This is something that nevertheless exercises the mind of Dutch Socialist MEP Alman Metten, who has voluntarily produced a report intended to educate those unfamiliar with what the treaty says about the criteria on budgetary discipline.

At the end of this year, the institutions will go through a dry run of the assessment which will happen at the beginning of 1998 to decide which countries will swap their currencies for the Euro between 1999 and 2002.

Metten has produced a working document to prepare the opinion of the Parliament on this issue. His bugbear is the obsession in Germany - and among many in the media - with the famous '3&percent; rule'.

According to Metten, too many people believe that countries cannot join the single currency bloc unless they have brought their budget deficits below 3&percent; of gross domestic product and their public debt below 60&percent; of GDP. This “wrong impression ... should be urgently corrected for all those who believe in it”, he argues.

Instead, he says, it should be made clear that this is an incorrect reading of the treaty, which in fact takes a much more nuanced approach - allowing deficits to be “close to” 3&percent; and taking account of cyclical factors as well as how much public spending goes into investment.

The Parliament's frustration over its limited role in single currency preparations will emerge during a debate on 20 June in Strasbourg, when MEPs will devote an entire morning to discussing EMU reports, including one from Karl von Wogau on how to enforce budgetary discipline in the single currency bloc and another from Fernando Pérez Royo on currency volatility in the single market.

Ironically, the Commission has equal grounds for complaint about the few real powers it has in this area. It can propose legislation - such as the detailed secondary laws that need to be drafted to fill in the gaps on the road to the single currency - and also write the papers on which the negotiations within the monetary committee are based. However, the real decisions about when to begin the third stage and how the convergence criteria should be interpreted will be made by the member states.

“We don't want to change the treaty to redress the balance because we don't want to reopen the treaty at all,” said a Commission official. “Anyway, we know from the time of the Maastricht negotiations what the attitude of member states is to the Parliament. They pared its role down to a minimum.”

Economics Commissioner Yves-Thibault de Silguy prides himself on his attempts to keep MEPs informed on developments in the monetary field. His predecessor Henning Christophersen also offered informal briefings to the Parliament's monetary sub-committee. But that is a far cry from affecting policy decisions.