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Whose pact is it anyway?

In June 2014, the people of Europe will go the polls to elect its MEPs for a five-year term.  This will be the 8th time it’s happened, but – courtesy of the crisis and ensuing austerity – for many voters it will be the first European election about Europe, as opposed to a mid-term vote on the domestic government.

There is a big opportunity for the Left here. 

The mainly ignorant media focus is on whether Hollande can persuade Merkel to give way on the as yet unratified Fiscal Pact (aka. the Fiscal Compact) concocted in late 2011 by Merkel and Sarkozy (no, he can’t, is the simple answer).

But the actual opportunity to set the European Union on a different course lies in potential for radical amendment of the regulatory ‘six-pack’ (to be followed by a monitoring ‘two-pack’ this summer), designed to ensure the proper implementation of the original Stability and Growth Pact, and passed into law in November 2011.

If you’re confused by two apparently parallel (com)pacts, don’t worry.  You’re supposed to be. 

There are relatively few people (other than me) who do understand it. Charlemagne at the Economist appears to be one, as does Peter Spiegel at the FT, who says about the less-known six-pack:

Almost unnoticed by the public, the European Union has already begun transforming itself into an organisation with far more central power over national economic decision-making. The European Commission, the EU’s executive branch, has been given authority to demand spending cuts under threat of large fines….

Indeed, it is all so confusing that the European Commission has had to provide its own guide Six-pack? Two-pack? Fiscal compact? A short guide to the new EU fiscal governance, which states helpfully:

The Fiscal Compact, which is the fiscal part of the Treaty on Stability, Coordination and Governance (TSCG) – once it enters into force – and the six-pack will run in parallel.

It’s difficult to work out exactly why we have two parallel systems (other than the obvious explanation that the Compact was a late play by Sarkozy to stave off defeat by looking tough). 

My suspicion is that it’s part of a quiet power struggle between the European Parliament and its Executive, who have passed the six-pack into law (in November 2011), and the European Council (basically the heads of the 27 states), which only became a formal part of the EU structure in 2009 under the Lisbon Treaty. 

Witness, as evidence, how Olli Rehn, Commssioner for Finance (and working through the Parliament,  referred only to the Growth & stability Pact provisions in his speech at the weekend, while Merkel’s Finance Minister prefers to reference the intergovernmental aspects of the Fiscal Compact in the wake of Hollande’s victory.

It is also difficult to know which precise version of  austerity legislation will win out in time.  On balance, though, the fact that the six-pack is in place, while the Fiscal Compact still awaits ratification (notably in Ireland, which may vote ‘no’), means that the real political opportunities for the left probably lie within the Parliament, rather than (via Hollande) the European Council.  Hollande’s team probably knows this, which is why it is content to soft-soap Merkel for the moment.

Of course, the drawback is that the European Parliament will remain under the control of the Right until June 2014.  That’s a long time for Hollande to wait before he can deliver, via the European Socialist Party (PES) MEPs, a radical change in direction, if it gains a majority (although even the prospect of post-election change may be enough to slow up its implementation pre-election).

Nevertheless, the opportunity for PES is to put together a legislative manifesto which has as its centre-point precisely such a change in direction, through a ‘Keynesian’ amendment to the six/two pack regulations.  Such amendments might, for example, include a requirement on the EIB (or individual countries) to fund large-scale investment works when the economic cycle requires it.

The result could be a European election campaign like no other: a central manifesto commitment to sensible anti-austerity macro-economic management, circulated across 27 countries in countless leaflets, seeking a socialist, pan-European mandate.  

Perhaps we might even, by then, be seeing British campaigners on porte-a-porte campaigns in Cergy-Pontoise, while our French comrades hit the streets of Skelmersdale (the towns are twinned).

I’m a geek, but even I thought it was a bit geeky for the PES to launch a two year manifesto development programme, in which socialist activists across Europe are invited to put forward policy proposals (the next stage is a forum in June to collate and assess ideas).  

Now though, I understand absolutely where they were coming from, and will be forwarding a version of this post under both the ‘Fair Economy’ and the ‘Active Democracy’ themes.  There is a real chance, I contend, to put what happens in Strasbourg at the heart of our campaigning in the UK, (probably) one year before a general election, in a way which both creates a route for anti-austerity that not even Merkel can scupper AND shows up just how murky and undemocratic the European Union has been to date.

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  1. Richard
    May 10, 2012 at 5:30 pm

    Your explanation that it “was a late play by Sarkozy to stave off defeat by looking tough” is all the more credible in the light of Sarko’s bad-tempered reaction to Cameron’s exercising of a non-veto.

  2. Richard
    May 10, 2012 at 5:32 pm

    Dam, hit post accidently.

    Basically Cameron had pissed on his parade.

  1. May 12, 2012 at 10:24 am
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