DOSSIER #01 Interview >>The time for indulgence is over
Interview DOSSIER #01 »The stability pact will not be undermined. It is not to be viewed as merely a list of invalidating circumstances. It is and remains the EU directive.« merous attractive markets in these new EU states, such as communications and mobility. In other words, you’re saying that highly skilled workers and consumers with purchasing power have been added. That’s right, and even the biggest skeptics have by now noticed this. For example, Polish farmers, who for a long time had been against the idea of EU membership, have benefited most from this move. This has become evident within a mere six months. Naturally, there are tremendous differences among the potential growth dynamics of the individual countries. But wasn’t that also the case in the early stages of the European Community and European Union? Just think of Ireland. High on the agenda at the Lisbon summit in the spring of 2000 was economic, social and environmental reform of the EU by 2010. The main goals were economic growth, full employment and sustainable development. Four years later, in April 2004, Romano Prodi, the predecessor of the European Commission’s current president, José Barroso, criticized the EU member states for failing to take on the responsibility required to achieve these goals. An indication of this failure is that hundreds of thousands of people in the eurozone lost their jobs in 2003. Still, there is no reason to throw out the directionsetting ideas of Lisbon simply on account of inaction, for which member states have rightly been reprimanded. The Lisbon agenda clearly indicates which factors have a key impact on national structures. These are the factors we must increasingly focus on following enlargement. In the first instance, we must increase our investments in education and knowledge acquisition. It will be crucial also to expand networks, raise the competitiveness of industry and the service sector, and reform health care systems in accordance with the demographic structures of member states. After all, what is the EU? It is the realization of the idea of partnership between governments, employers, workers, trade unions and other associations. They are all involved in transnational governance, and their challenge is to structure it in a way that benefits all members. Are the 10 new EU member states facing tasks similar to those of the 15 countries of the old European Union? They certainly are. The structural challenges the new members have to come to grips with are those the old member states themselves had to master when they were the newcomers. The member states have to implement a macroeconomic policy oriented toward growth and stability while pressing ahead with economic reforms aimed at boosting growth across Europe. In addition, they have to improve sustainability. In the economic sphere this means making adjustments in line with the aging of their populations; for social policy it means creating and preserving jobs; and in terms of ecology, from a European perspective, it primarily means investing in the transportation and energy sectors. And what are the major differences between these two groups of member states? For one thing, the unemployment rates and budget deficits of the new members are about twice as high as those of the EU-15. Also, the per capita income of the people living in those countries is less than onehalf the income of their counterparts in the old member states. However, even as we look at these figures, I should warn against thinking only in terms of the arithmetic average. If we compare the new member states with one another directly, we see considerable differences among their rates of inflation, unemployment figures, hourly wages, education levels, consumer behavior, health care systems and many other parameters. Can the new member states deal with all these challenges without outside help? The answer to that question differs depending on which country you’re looking at. We must be very careful not to underestimate the challenges. That’s why country-specific recommendations must take into account the respective country’s particular circumstances. For example, we may in some cases have to extend the adjustment period. If so, however, we must always be mindful of the fact that our ultimate goal is the sustainable stabilization of the European Union as a whole. The new member states are now subject—as indeed the old ones are—to strict monitoring of their economic and budgetary policies. This includes an assessment of their fiscal situation. We already know that Cyprus, the Czech Republic, Hungary, Malta, Poland and Slovakia have all failed to cap their fiscal deficits at 3 percent of GDP, and that Cyprus and Malta each has a national debt that exceeds 60 percent of GDP. What conclusions has the Commission drawn from this state of affairs? Well, it is not immediately going to start monitoring their fiscal policies more closely or imposing sanctions. These measures will be applicable only once these countries have been incorporated into the eurozone. This differentiates them from Greece and the other countries that have already introduced the euro as their currency. However, this approach does not mean that we are not carefully studying the medium-term budgetary plans of the new member states, or that we are turning our back entirely on making recommendations. After all, these member states are to be incorporated into the eurozone in the foreseeable future. We shall therefore be indicating to them at a later date how they might gradually set about eliminating their budget deficits and fulfilling the convergence criteria. The case of Greece has shown that we must proceed in a truly thorough and transparent manner if we wish to avoid the unhinging of the EU as a whole. Insecurity in no way constitutes a basis for healthy growth across the new European Union. Hans Eichel, Germany’s finance minister, estimates that his country’s deficit in 2004 will again exceed 3 percent—its second violation of the stability pact in a row. The European Commission has communicated its understanding both for Germany and for France, which also has a deficit in excess of the limit. This attitude might be very welcome to certain finance ministers. Financial authorities such as Edgar Meister, a board member of the German Bundesbank, and Jean-Claude Trichet, president of the European Central Bank, on the other hand, take the contrary position and are indeed extremely worried about this. They view this policy of understanding as a danger to the euro. think: act 35
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