Nessa Childers, MEP for Dublin, explains her opposition to the incorporation of the Fiscal Compact into the EU’s treaties, which was debated with the EU executive, in Strasbourg, at this week’s plenary session of the European Parliament:
“At the height of the economic crisis, in 2012, almost all EU countries signed up to the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, also known for short as the Fiscal Compact.
“It further tightened the fiscal constraints imposed on Member States’ budgets as a condition for access to the loans facilities provided by the European Stability Mechanism, which replaces the temporary mechanisms created to manage the bailouts to Greece, Ireland and Portugal.
“This further tightening of the debt brakes foreseen in the Stability and Growth Pact, (which had been created especially with coordination of the Eurozone countries’ finances in mind) was seen as a necessary step when other Euro countries might yet need emergency support, but a conservative majority among the EU leaders would only unblock it under strict fiscal consolidation conditions.
“Because two EU Member States did not sign up to the Fiscal Compact treaty, it was signed as a conventional international agreement, outside the aegis of the EU’s treaties and institutions.
“Now, those who remain attached to the narrative that profligacy in public expenditure was at the heart of the crisis want to see this treaty fully integrated into the EU treaties.
“This would be a further step in a worrisome trend towards the elevation of “golden rules” for balanced budgets to the status of constitutional or quasi-constitutional norms.
“What we saw at the start of the Eurozone crisis was essentially a scramble to save the financial sector from its own misdeeds, which dangerously depleted our public coffers.
“Because the Eurozone was designed, at Germany’s behest, to prevent fiscal transfers from the fiscally responsible to the spendthrift, as it feared, while the currency’s governance remained incomplete and oblivious to the dynamics of economic integration that created bubbles in the periphery, the system ground to a halt.
“Instead of obsessing over public debt, which was a symptom rather than a cause, and tying our hands-on counter-cyclical policy, we should be focussing our attention on other matters to stimulate growth, a necessary green transition and employing our young.
“The European Central Bank, after the mistaken involvement in the troikas, has been single-handedly bearing the weight of financial stability and recovery through quantitative easing, whilst the Member States have refused to pull their weight on the fiscal front, which is sorely missing.
“This comes with its risks and highlights other failings, such as the lack of accountability and transparency in the goings on of the Eurogroup of finance ministers.
“Such matters are much more important than the ideological war on fiscal leeway, which has been very much missing over the lost decade we’ve been through.