Speech on Fiscal and Economic Union, by Sharon Bowles MEP
The starting point, which just about everyone agrees, is that the Monetary Union was incomplete.
We have, or are in the process of achieving, better discipline over budgets. This is harder to do when times are difficult, but might never have been done without difficult times. However, we should not underestimate the power of the decisions that have already been made in the 6-pack and 2-pack. These mechanisms encroach deep into national sovereignties, yet the message constantly being sent out about the next reform, before the last one has got underway, is on the one hand depressing for citizens in program countries in particular, and on the other hand potentially destabilising if markets and other countries see it as an admission of failure.
The setting up of the SSM and the moves to a Banking Union also shows recognition, even if still incomplete, that there has to be greater solidarity to avoid contagion, and for some it justifies the vision of a much fuller integration. Whether pragmatic or visionary, the moves along this path will continue and it is not only market confidence in banks that will be addressed when the ECB conducts its asset quality review and balance sheet assessment. Laying to rest this 'known unknown' will have significant political effect too.
The fact is that while we are trying to sever the link between sovereigns and banks through the banking union, there is symmetry in that both sovereigns and banks have legacy issues that remain a weight dragging down negotiations for genuine integration.
But returning to the governance framework, the Commission has published two communications to which the Parliament responded in a resolution last week. Our message was to prioritise full implementation of the 8-pack (6 plus 2) and to bring more clarity to the added value of any new measures. The social dimension of the EMU is now being considered as well, and rightly too in terms of the backlash from austerity measures, and the Parliament sees a greater role for socially reinforcing incentives for convergence, but be clear this does not mean money for nothing.
At the blueprint conference recently I said we need a reality check.
If you look at the graphs for debt repayment and apply this shock and that shock, the one that makes the most difference is growth shocks. The debt repayment under existing plans and growth forecasts - which recently have all been missed - already takes a generation. Low interest rates are not permanent nor under our lone control. As soon as the foot comes off the pedal on quantitative easing in other jurisdictions, as has already been demonstrated by tapering talk in the US, our bond interest rates rise.
Clearly that makes growth an overwhelming priority.
It also means we should stop talking as if it is all going to be fixed in a few years. The trajectory in terms of deficit may be fixed, debt will take longer.
It also means that the watchful eye of EU economic governance is going to be intrusively, pushily present for a long time.
Thus there is a second imperative: democracy and oversight.
On growth attention has turned to reinvigoration of securitisation, in particular for long term infrastructure and SMEs. On balance it is probably right to be pursuing these issues with assistance from the EIB, but there is a little voice in my head saying we seem to be making the EIB into a monoline insurer. So my little voice says these measures should be a kick start mechanism rather than a procedure to which we become addicted. Confidence needs to return to investors.
On democracy there is a lot to be done. On the one hand much more transparency and accountability is needed so that citizens and national parliaments can understand the processes that are going on, and for the parliaments to be involved in the semester.
Under the two-pack legislation there are possibilities for the Troika and the Eurogroup to work in a more transparent way, and we have started with hearings in committee already.
However, a lot of the process of putting more powers of governance at the Eurozone level has been done inter-governmentally. There are clear downsides to this process which has no real provision for democratic scrutiny of European level decisions, although the ECON committee has had many hearings with Ministers, the ECB, the IMF, the Eurogroup President and Commissioner Rehn trying to shed light on events and intentions.
It is a major consideration now for the ECON committee to work out further methods and procedures for scrutiny of these European level activities, with far more fixed dates for regular appearances as well as ad hoc arrangements. We have heard the suggestions from the European Council that Parliament should exercise more oversight - and as I have said, by golly we have tried! But we have also tolerated excuses of urgent Eurogroup meetings - I don't deny that there have been many - or excuses of foreign travel, confidentiality, not signed off and point blank declarations that no way can a diary planned long in advance be disturbed or that accountability is not really to us anyway.
Going forward cancellations and shortening of appearances and treating the democratic side as inferior to other business, which can be squeezed and shrunk, can not be tolerated.
This is not a power-grab or petulance, but a foundation of truly respected Parliamentary oversight is a pre-requisite for progress, for example towards deeper measures that can eventually underpin elements of fiscal union, an EMU Treasury or a Euro area debt agency.
The opposite is far less flattering: historically credit worthiness and democracy, or the lack of credit worthiness and tyranny, have been more coupled together. Our current processes are undemocratic, obscure and inefficient. They are full of good intent but the ties of trust are being broken rather than forged, a benign dictatorship is not what the people expect, even if it is one built on unanimous voting in a clique. Neither Europe nor the Eurozone can be built without the trust of the people or on economic data alone. The democratic issue is no longer just an inconvenience; it is a matter of survival.
ENDS