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The key words of the European summit

The next European summit will have the economic crisis as its subject. Not very original. The previous one had it too. And the following ones too, without a doubt. Here is a paper written for Ouest-France where I summarize the main topics under discussion.

eurobonds. Eurobonds consist of pooling the debts of the various Member States by allowing the lifting on the financial markets of loans, guaranteed in common. The only problem is that article 123 of the Treaty prohibits " the acquisition by the European Central Bank of debt instruments”. An argument on which Angela Merkel, the German Chancellor, braces herself to refuse any opening. But it is increasingly isolated on the political scene. Luxembourg and Italy first, United Kingdom, Austria, Ireland, Slovakia then showed their agreement for the creation of such a mechanism advocated by France.

Major works / Projects bonds. “Project bonds” are the issuance of bonds to enable the financing of major European infrastructure projects (transport, energy, information technologies, etc.). Everyone is on the same wavelength today. The European Parliament, the Member States and the European Commission agreed on Monday to release 230 million euros from the community budget. This will make it possible to borrow 4 to 5 billion on the markets to finance these major national or European projects. The capital of the European Investment Bank could also be increased. Which would increase its lending capacity. This point is still under discussion.

European Central Bank. The firefighter on duty could once again be called to the rescue. In the fall of 2010, the European Central Bank launched a bond buyback program for Greece. Program reactivated in the summer of 2011 to deal with Italian and Spanish debts. Germany considers that this is a breach of the European Treaty which prohibits this type of measure, except in an emergency. Both Spain and Italy want its recovery.

Structural Funds. There are 82 billion euros available which have not yet been spent. The European Commission has proposed to ease the conditions for access to European funding. Some States would thus only have 5% of the European amount to co-finance.

Budget. The Maastricht criteria (maximum deficit of 3% of GDP and maximum debt of 60% of GDP), further reinforced by the budgetary pact and the golden rule, are untenable for most countries. Even the Netherlands, despite being supporters of budgetary orthodoxy, are imploring the European Commission to put a little water in its wine. The austerity plans could thus then be reviewed, or at least spread out over time.

Structural measures. Restarting growth everyone is for. But everyone puts different ideas into it. For the European Commission, this essentially involves reforms that can hurt the French government: extension of the retirement age, reduction in wages in less competitive countries, relaxation of labor law, particularly in terms of layoffs.

Nicolas Gros Verheyde

Published in Ouest-France, May 24, 2012

Nicolas Gros Verheyde

Chief editor of the B2 site. Graduated in European law from the University of Paris I Pantheon Sorbonne and listener to the 65th session of the IHEDN (Institut des Hautes Etudes de la Défense Nationale. Journalist since 1989, founded B2 - Bruxelles2 in 2008. EU/NATO correspondent in Brussels for Sud-Ouest (previously West-France and France-Soir).

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