Stability Pact, Belgian presidency: “Negotiating, but no going back to the old rules”

Brussels – “There is the willingness to negotiate, but we cannot go back to the old rules.” The Belgian Finance Minister, Vincent van Peteghem, president-in-office of the Ecofin Council, makes it clear that the trilogue just around the corner to close the Stability Pact reform process is not intended as an opportunity for upheavals of any kind. Some would like it in Parliament, and the Greens co-chair Philippe Lamberts made no secret of it. The Greens leader would downright scuttle it, but the intentions are different in the Council. “There is a need to come to conclusions” of the budget rule reform process, the Belgian minister stresses. “It is important to give clarity to financial markets”.

A not coincidental emphasis, the latter. The EU is relying on the markets for its sustainability plan, to finance green and technological recovery. Faced with the need for massive investments, in the order of hundreds of billions of euros, a clear signal must be sent to those who intend or must decide whether to bet on Europe.

Wednesday (Jan. 17) the House is to vote on the proposal to start negotiations with the Council on reforming the Stability Pact, starting from the solution found by the twenty-seven member states just before Christmas. There are some (the Greens and the Left) who do not see this arrangement as sustainable, but the other groups want to try. Liberals (RE) want to open the negotiations and try to perfect where possible. The outcome is entirely dependent on negotiation.

There’s for sure a part of the Social Democrats (S&D) unconvinced by the proposed new rules. The PD’s head of delegation to the European Parliament, Brando Benifei, said verbatim that what was put on the table “leaves us dissatisfied,” and that what is coming to the House “is not the text of the new Stability and Growth Pact.” Few are betting that the House will reject the proposal to start inter-institutional negotiations, many more predict a tug-of-war because, they reason in Brussels, if the socialists stand firm on left-wing instances and the liberals gain a better understanding of what the proposal entails, the table
could blow up. Council and commission reiterate that it is not possible.

Valdis Dombrovskis, commissioner for an Economy that Works for People, reminds at the end of the Ecofin Council meeting that “for the fourth consecutive quarter growth remains weak,” and that the winds of war combined with the Red Sea crisis cast shadows of new issues. “We see that there are risks to growth forecasts and energy prices.” An agreement on economic governance is felt to be even more urgent and necessary in light of an uncertain environment fraught with “downside risks.” The willingness to begin negotiations demonstrates that both sides agree in principle that the old rules are not the goal to pursue. The impression is that the council will have to make concessions. To what extent an agreement can be reached is left to the table, a table with a tight time frame.

If, as expected, the chamber were to say “yes” to the opening of the trilogue, the latter would start immediately. At that point, you would have a scant month. There is time until February to come to an agreement, offer the time the legal service and the interpreters need for the appropriate translations, and have the final vote of the chamber in April, the last useful session before the dissolution of the European Parliament. With an agreement in April, the council could proceed to close the dossier, by formal vote, even in the run-up to the European elections. To replace the old rules is therefore also a race against time.