Is the EU right to spare Spain and Portugal?
Despite their excessive budget deficits the EU Commission has decided not to fine Spain and Portugal. The finance ministers of the EU have endorsed this decision after the EU Commission pointed to the difficult economic situation in these countries and widespread Euroscepticism. While some commentators are pleased at this apparent change of direction in the EU others are appalled.
EU finally on the right track
Brussels is finally coming to its senses, La Croix writes in delight, and hopes that further steps will follow:
“Since the British decided to leave the EU in June the European institutions have been careful not to fuel Europhobia or exacerbate the discredit they suffer when they adopt a purely technocratic approach. Such caution had already been employed vis-à-vis France and its budget deficit. A certain flexibility can even be observed regarding Greece. The upshot is that the Commission and the governments of the Eurozone seem to be playing it by ear. It's time to pursue recovery policies in the countries that need them, with powerful investments in future-oriented sectors. That presupposes a common vision, from Berlin to Madrid and from Paris to Brussels.”
Portugal's PM faces major challenges
Portugal's government has benefited from the EU Commission's decision but must now act with caution, Jornal de Negócios warns:
“This is a political victory for Portugal's prime minister António Costa. … But where there are winners there are also losers. In this case the losers in the abstract sense are the EU Commission and certain Ecofin 'hawks'. … Since no one likes to lose, this 'victory' marks the start of a new era in the relations between Portugal's socialist government and its European partners, an era of zero tolerance. Any deviation from the rules no matter how small will be harshly punished - which confronts Costa with a number of significant challenges. Firstly the obligation to keep the budget deficit below 2.5 percent this year. Secondly to exercise the fiscal discipline necessary to achieve this and to secure the continued parliamentary support of the left-wing parties [for the minority government].”
EU avoids another blunder
There are a number of reasons why the EU Commission has made the right decision, argues the daily Avgi:
“It avoided adding fuel to the many fires that are burning in the Eurozone right now. Firstly, it avoided causing further damage to the two national economies that are most struggling to stay on their feet. ... Secondly, the Commission once again preempted accusations that it treats some countries differently to others. Because how could it justify strictly applying the regulations in Spain and Portugal when it is consistently finding ways to be flexible with France and Italy? Last but not least, the Commission seems to be taking the European citizens and the current situation into account. What is the point of the EU Commission presenting itself as a stringent guardian of the treaties when the EU is increasingly losing its appeal for its citizens?”
Commission undermines stability pact
The EU Commission made its decision with other potential deficit sinners in mind, criticises the Handelsblatt:
“ How can anyone continue to take the Brussels budget watchdogs seriously if they never sanction violations of the stability pact? ... The governments in Lisbon and Madrid both made costly election promises and at the same time have recoiled from implementing key structural reforms. The Commission should at least have reacted with a minimal symbolic punishment. But its failure to do so maybe have something to do with other chronic budget violators. In 2017 - a presidential election year - France is supposed to finally push its state deficit below the three-percent mark. ... The Commission would not be able to let France get away with it next year if it had punished Spain and Portugal this year. Which is why they got off scot-free.”
EU gives in to southern member states again
The EU Commission has lost all credibility, De Telegraaf maintains:
“Spain and Portugal are not sticking to the rules. Yet Brussels has decided to give them (even) more time to get their affairs in order. No punishment, then. EU Economic Affairs Minister Pierre Moscovici has justified the decision saying that mistakes were made but it's the future that counts now. But isn't credibility a key factor for the future? The Eurozone is turning more and more into a monetary union in which weak members aren't being corrected in time, and are bailed out as soon as things start going wrong. The results of the bank stress tests come out this week. Will the member states fill the gaps with tax money, contrary to the new agreements? That will be another test for Brussels' steadfastness.”
Not a victory for Spain's government
Brussels' decision not to sanction Spain for its excessive deficit for the time being is a wise one, comments El País applauds, but the Spanish government can't chalk it up as a success:
“It's clear that the Spanish economy didn't deserve this punishment - unlike the government, which cut taxes in the middle of the budget consolidation programme - and that even a modest fine wouldn't solve the problem of financial stability. Even if the economy got off lightly (for the time being at least - because a resolution on structural funds is still pending) no one can call this a political triumph after four years of failed deficit correction. … It has to be said, though, that the conditions imposed by Brussels are difficult to fulfil. This year the deficit has exploded and to bring it down to below 5 percent again would be an almost impossible feat. … Especially bearing in mind that the transitional government is simply using stop-gap measures to resolve a problem that, as Brussels keeps stressing, is of a structural nature.”
A politically wise decision
The EU Commission has made the right decision, Der Standard comments:
“It reflects the historic conflict between Germany and France that has been playing out in the Eurozone since 1998, with the other states in between. In Berlin are the guardians of the purist euro doctrine, in Paris the statists who put politics and growth before stability. From this perspective the Commission's decision not to impose fines on Spain and Portugal is a wise one. The Eurozone countries must act in unison, coordinate measures and create a flexible economic and monetary union. The Union has always fared better when its members seek profit and progress together rather than competing against each other. No one should be more aware of this than the euro's main beneficiary, Germany.”
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