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EU Official Worries over Budget Deficits




The EU commissioner-designate for economic and monetary affairs, Olli Rehn, successfully batted off questions from MEPs on Monday evening (11 January), with debate on public finances and the EU's new economic strategy making up much of the exchange.

A packed audience attended the session in front of deputies from the European Parliament's economic and monetary affairs committee, although a downbeat atmosphere prevailed, in part as a result of Mr Rehn's apparent comfort in the portfolio and his phlegmatic speaking style.

"I think he dealt with the issues very well," the commission's director-general for economic affairs, Marco Buti, told EUobserver after the event, conceding that the Finnish politician was clearly "a different character" to outgoing Spanish economy commissioner, Joaquin Almunia.

Hailing from Europe's liberal political family, Mr Rehn identified a strengthening of economic policies, a return to healthy public finances, and more unified EU representation in international fora as the means to set Europe on the right path again.

"Stimulus packages are still necessary…but further developments of public debt have become untenable, especially in light of Europe's ageing population," said Mr Rehn, who has held the post of EU enlargement commissioner for the past five years and is also a former MEP with an extensive education in economics.

With the vast majority of EU governments breaching one or more of the budgetary limits laid down by the bloc's Stability and Growth Pact, MEPs queried whether Mr Rehn had the "backbone" to haul national executives back into line.

"I ensure you that I will use all the tools at my disposal to make sure member states get public finances in order," he said, adding that Greece should not be kicked out of the eurozone but that fines against Athens could not be ruled out.

Greece drew strong criticism last autumn after a change of government resulted in a considerable upward deficit revision, with the country due to present plans to the commission in coming weeks on how it intends to rectify its fiscal problem.

The commissioner-designate also indicated that he would use all the provisions under the Treaty of Lisbon to help put greater rigor into the pact and protect the stability of the euro, adding that he was "intrinsically inclined" to support obligatory budget surpluses during good years.

Questioned on the idea of a common bond for eurozone countries, Mr Rehn said the idea "merited a fresh look," but added that new instruments to help embattled euro area members risked creating a situation in which governments behave badly because they know they will be bailed out.

On a potential fast-tracking of eastern states' entry into the euro area he was insistent on any given candidates' need to comply with all the accession criteria first, adding that Estonia is the closest next entrant, with the commission set to re-examine its application in the spring.

2020 Strategy

MEPs were also keen to know where the Finnish politician stood on the issue of stronger surveillance mechanisms under the EU's new economic growth plan, the 2020 Strategy, following a recent proposal by the Spanish EU presidency that Brussels should sanction capitals which fall out of line.

Citing a "lack of ownership" as a chief cause behind the failure of the bloc's current economic plan, which expires this year, Mr Rehn said the key to achieving the 2020 aims would be the setting of realistic objectives, subsequently broken up into clear targets for individual states.

"We then need to make sure that we have the necessary surveillance and funding" to carry out the plan, he said, prompting the thorny question of whether the EU should have a greater common budget to promote economic co-ordination.

"We have a chance to discuss this thoroughly at the budgetary mid-term review," said Mr Rehn. "In my view the goals of the EU 2020 Strategy will have to be emphasised in light of the review."

The commission is set to propose a communication on the 2020 Strategy in the coming weeks that will look at the issue of binding mechanisms, amongst other things, with EU leaders scheduled to examine the document at an informal summit on 11 February.

Lobbyists and dinners

With time running down, non-aligned MEP Hans-Peter Martin asked whether the commission-designate would be able to withstand the extensive lobbying he was likely to face, allowing for a rare moment of humour.

"I prefer a quiet dinner at home with my family rather than an extravagant dinner with a lobbyist in [the famous restaurant] Maison de Cygne," he said, quickly adding "although it does provide good cuisine."

With three more commissioner-designates scheduled to present themselves before the parliament's economic committee, MEPs were keeping their views on how Mr Rehn performed under their hat on Monday night, although committee chair MEP Sharon Bowles suggested to journalists that post-mortem discussion had focussed more on the hearing process.

"Possibly he could have said more but maybe he was restrained by the public forum," she said, pointing to sensitive topics such as Greece's deficit.

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