EU, After Win on Budget Gaps, Now Considers Changing Rules
A court ruling that European governments illegally let France and Germany sidestep budget-deficit rules likely won't force the countries back into line, because victorious European regulators and most governments are looking at writing new rules rather than enforcing the old ones.
The decision yesterday by Europe's high court gave a rare breath of life to the European Union's tattered directive limiting budget deficits for the 12 EU countries that use the euro -- a limit currently exceeded by half of those nations. The decision also reaffirmed some authority for the European Commission, the EU's executive arm, over national capitals in the struggle to find a balance of power on fiscal matters.
But the Commission already is working on revising the rules it went to court to defend. Moreover, commission officials said yesterday that it could take as long as three months to decide whether they would risk another fight with national governments over the current rules. That leaves the budget rules -- in the so-called Stability and Growth Pact -- in a state of flux.
Dutch Finance Minister Gerrit Zalm, president of an EU council of national finance ministers, told reporters in The Hague that he and his counterparts would analyze the court decision together with the commission. "Whether that will lead to a formal change of regulations and treaties is still to be considered," he said.
There will be some pressure in that direction. Some smaller nations, such as Austria, that have kept their budget deficits in line urged the Commission to again recommend sanctions against France and Germany. The European Central Bank, which wants governments to control spending to ease its job of fighting inflation, suggested the commission take "necessary steps" to enforce the existing framework.
But some analysts were skeptical the court's decision would lead to much change. "In the near term at least, the implications of this judgment are likely to be limited," wrote Neville Hill, economist with Credit Suisse First Boston. Julian Callow, economist at Barclays Capital in London, is projecting that the average euro-zone budget deficit will be 2.9% of gross domestic product next year, just below the stability pact's 3% limit. Mr. Callow said large budget deficits around 3% are likely to remain for the next several years, meaning that a number of countries will break the pact and bring up the EU average.
The EU commission and national governments are floating several proposals to alter the pact, including a focus on overall debt levels rather than annual deficit levels. There is also a push to get countries to limit spending when times are good to allow for more leeway to increase spending when the economy is weak.
In the late 1990s as nations were preparing to adopt the euro, Germany and France insisted on a stability pact to secure the value of the new common currency. Now these two nations -- which make up half of the euro-area economy -- are its most egregious violators.
In November, in its role as budget watchdog, the Commission recommended that national finance ministers declare that France and Germany hadn't done enough to reduce their deficits and needed to do more. The recommendation would have put the two nations on a path to pay hefty fines as required by the pact.
But a three-year economic slump and resulting high unemployment and dwindling tax revenue had put pressure on deficits, and some ministers didn't want to exacerbate the slowdown by forcing further budget cuts in the two big economies.
In an all-night meeting, ministers rejected the commission's proposals and lifted the procedure for excessive deficits. The move was seen by many analysts as the death of the pact. Incensed, the commission sued governments before the European Court of Justice.
In yesterday's verdict, the court agreed with the commission that finance ministers "cannot depart from the rules" and simply ignore the excessive-deficit procedure. But it also said the ministers can vote to reject the Commission's recommendation if they have adequate grounds, meaning the Commission still needs the finance ministers' support.
"This judgment is a Pyrrhic victory for the Commission," said Chris Huhne of Britain, an economic spokesman for the Liberal Democrats in the European Parliament. "If the Commission cannot get the backing of a majority of ministers, it has no teeth to make the pact work. That is a key reason why there now has to be a reassessment of the pact ... to ensure that it works properly in future."
France -- which along with Germany is expected to breach the 3% rule for a third consecutive year in 2004, and possibly again in 2005 -- said after the ruling that it would continue its policy of "controlled spending," according to a government spokeswoman. A spokesman for the German finance ministry claimed victory, saying that the ruling confirmed that ministers acted legally last year.
The Commission said only it would study the decision. The EU's executive arm will consult with governments "to consider how to find a satisfactory solution," said EU President Romano Prodi.
欧盟考虑修改预算赤字规定
欧洲法院裁定，欧洲各国政府容许法国和德国违反欧盟预算赤字规定的决议无效，不过，这一裁定不大可能会使这两国遵守预算赤字规定，让预算赤字回落到欧盟规定的上限以内，因为欧洲监管机构和欧洲大部分政府正著眼于制定新的预算规定，而不是强制执行旧规定。
欧洲法院周二的裁决使欧盟(EU)针对欧元区12国的预算赤字规定得以□延残喘。目前已经有一半的欧元区国家无法将赤字控制在欧盟规定的赤字预算上限之内。这一裁决还重申了欧盟的执行机构欧盟委员会(European Commission)在各国资本问题上的权威，该机构目前正在努力实现欧盟与各国在财政问题上的权力平衡。
不过，欧盟委员会已经著手修改其曾维护的财政预算规定。而且，该委员会的官员周二称，可能还需要3个月的时间才能确定是否要冒险一搏，同各成员国国政府就现有规定进行辩论。这意味著预算规定，即《稳定与增长公约》(Stability and Growth Pact)可能发生变动。
欧盟委员会和欧元区各国政府正在考虑几个方案，以便对《稳定与增长公约》进行修改，其中包括将原来的监控对象－－每年的赤字水平调整为总体债务水平，这将促使各国在经济处于良好状态时控制开支，而在经济疲弱时增加开支。
