No pact in treaty, says MEP

Date: 11/07/02

By Peter Chapman

KLAUS Hänsch is against enshrining the controversial stability and growth pact into the EU's treaty - despite fears that the accord risks losing its punch.

But the MEP, who heads the Convention working group tackling 'economic governance', said this week that it backs reforms in the way the EU disciplines errant member states and sets the annual broad economic policy guidelines.

His comments come amid increasing fears that French tax cut pledges by Jacques Chirac, and pressures on Italian, German and Portuguese budgets will dent the EU's system of fiscal discipline.

'The stability and growth pact has to remain untouched and remain outside of the Treaty,' Hänsch told the European Parliament's economic and monetary affairs committee.

But the MEP - whose group includes former Commission President Jacques Santer, former Irish premier John Bruton and Polish Europe Minister Danuta Hübner - said that did not mean a weakening of fiscal discipline for member states that allow their budgets to slip.

Instead, he said the Commission 'should play more of a role in the early warning system when it comes to excessive deficits', adding that the 'institutional balance' would have to be worked out. Granting the Commission more powers could be a huge shot in the arm for successors to Finance Commissioner Pedro Solbes - who has seen member states, notably Germany, muffle attempts to rap them on the knuckles.

In another boost for the EU executive, Hänsch said the Commission might also be given the formal right to propose the broad economic policy guidelines that form the annual targets for government finances.

MEPs should also be able to flex their muscles. 'There appears to be consensus that the European Parliament should be given the right of approval when it comes to the broad economic policy guidelines,' he said, adding that national parliaments should also have more of a say.

But the German said the Convention should not tamper with the power of the Frankfurt-based European Central Bank over monetary policy and the rights of member states to set overall economic policy for the EU.

Other highlights, said Hänsch, include the need to define key issues such as growth, employment, social progress and sustainable development in the future EU treaty.

His group will table a final report to the full Convention in September.

Report of comments by MEP Klaus Hänsch, who heads the European Convention working group tackling 'economic governance'. The group supports reforms in the way the EU disciplines errant Member States and sets the annual broad economic policy guidelines, but is against enshrining the controversial stability and growth pact into the EU's treaty.