EU chiefs trump Franco-German competitiveness pact
Published: 28 February 2011
European Commission President José Manuel Barroso and his counterpart at the European Council, Herman Van Rompuy, disbursed a paper outlining new competitiveness targets this weekend.
The Van Rompuy-Barroso pact is being kept under lock and key but sources indicate that it is substantially more flexible than the
six-point plan proposed recently by French and German leaders Nicolas Sarkozy and Angela Merkel. The new pact comes hot on the heels of that Franco-German non-paper, which carried the identical name 'competitiveness pact'.
The intention is to tie the conditions in the Van Rompuy-Barroso paper, which will likely include guidelines on salaries, pension ages and corporate tax, to loans from the European Financial Stability Facility, which has so far given lifelines to both Greece and Ireland and
may rescue Portugal in the near future.
Though the full contents of the Van Rompuy-Barroso pact are being kept secret, sources indicate that it will follow the EU's
Annual Growth Survey unveiled in January.
No more abolition of wage indexation
Unlike the Franco-German pact, this latest paper will not ask member states to abolish their wage indexation systems, a move that has angered a plethora of eurozone countries.
The paper will say that wages will not be higher than those of a country's three main trading partners, revealed an EU source who wished to remain anonymous.
Belgium, Cyprus, Luxembourg and Malta all use indexation to set some domestic wages, while others - including Portugal - relate salaries to price growth through collective bargaining agreements and negotiations.
The Franco-German pact was
met with great opposition by other member states and triggered much resentment as the two countries went about rewriting European economic policy behind closed doors.
The last meeting of EU leaders in Brussels asked Barroso and Van Rompuy's teams to consult countries on how they could converge their economic policies to spur jobs and growth, a request observers say grew out of resistance to the Franco-German plan. This weekend's Van Rompuy-Barroso pact is the result of these consultations.
The joint European Commission and Council paper comes ahead of a crucial EU summit next month to determine what kinds of conditions EU countries can live with in order to get loans from the European Financial Stability Facility (EFSF).
Lower German expectations
The new pact also indicates that behind the scenes the EU has perhaps managed to lower Berlin's expectations of what it can demand from countries wishing to get a loan that depends on Germany's AAA credit rating.
Both Germany and France have
lambasted Ireland for having the lowest corporation tax of all EU member states but Ireland has maintained that its corporation tax will not budge, even on the EU's insistence.
The Franco-German pact, which foresaw the creation of a common corporate tax, is steeped in mystery because German officials deny its existence while non-German officials mock their German colleagues' denials. Officials also indicate that this was solely a German paper.
"This non-non-paper was not even a French paper," said one EU source.
This latest EU pact shows that Barroso and Van Rompuy disagree with the Franco-German "one-size- fits-all approach," to borrow the words of an EU source.
(euractiv.com)
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Confido nella capacità di mediazione di Van Rompuy...