“European economic governance cannot override democratic choices at the national level.”

in:


The European Parliament United Left Group responds to the ‘Report of the Five Presidents’ Completing Europe's Economic and Monetary Union

The economic governance framework, including the European Semester and the Stability and Growth Pact, has failed to meet the challenges both in the EU and the Eurozone, contrary to the EU's insistence that this framework would have become "the shield against the crisis". The problem is both on substance and a political one, since it has failed to build efficient mechanisms and actually has promoted a biased framework, allowing only neo-liberal and austerity-oriented policies, depriving at the same time the member states of essential elements of ownership and democratic control. There is a need for a radical change.

The 5 Presidents' report represents a well-coordinated effort to "institutionalise austerity". It continues in the same direction, failing badly to assess the current crisis. The report has the same neo-liberal political understanding and interpretation of the economic and fiscal reality in the EU and the Eurozone. It offers no way out of the prevailing austerity narrative. In fact, it proposes the intensification of policies of which the immediate priorities are boosting competitiveness and structural convergence, imposing fiscal policies and austerity, gradually making the convergence process ever more binding. The social cohesion and social indicators, as well as the democratic accountability and transparency are used as "a fig leaf" for a report that strongly promotes the deepening of the EMU and further binding the member states to essential economic and fiscal policies.      

The way ahead

The current debate has failed to make a concrete stocktaking analysis and assessment of the functioning and the achieved results of the existing framework. This assessment is urgently needed.

European economic governance cannot override democratic choices at the national level. This has generated a growing resentment in adjustment countries toward European institutions and a dangerous loss of credibility in democratic institutions in general. Member states should have the ability to conduct economic policy.

The dynamic role of the public sector to support productive and job-creating investments to enhance social and cooperative sectors and SMEs has to be underlined. A counter-cyclical orientation should be matched with a sound public investment framework with the aim to enhance economic growth and social cohesion. There is no evidence that "debt brakes" achieve a reduction of public debt. The contrary has been proved. In the short-term, investments should be exempted from the Stability and Growth Pact rules, since investment creates assets. A truly democratic macroeconomic dialogue is better suited to the problems of the Eurozone than is the Pact. This dialogue should focus on macroeconomic imbalances, also in countries with a chronic current account surplus and on monitoring of the total debt of all sectors.

The renegotiation of debts, their impairment and reprofiling and the presentation of a concrete emergency plan to support the economy of these countries, based on shared and collective responsibilities, is an urgent need. We denounce that (sic) this significant parameter is completely missing from the report. It is urgent to start a debate on the sustainability of debt, which has been exacerbated by the counter-productive policies imposed upon EMU countries in crisis.

Policies to tackle public debt have caused increasing shortcomings on fundamental social issues, such as access to health and education. The report touches superficially upon issues of the social dimension. The fight against unemployment, poverty and social exclusion are absolute priorities. Social indicators should also be very much taken into account in any planning and recommendations.
 
Growth and prosperity cannot be achieved by structural reforms based upon weakening public and private demand. Reforms that are pivotal in boosting sound economic activity and employment with social rights and decent wages should be prioritised. In that sense, growth-oriented and economically and socially sustainable reforms are needed. We are against the creation of National Competitiveness Authorities, whose aim will be interference in collective bargaining processes. Creating a sound economic and fiscal environment for recovery and growth is an immense challenge and should be obtained through growth-enhancing reforms, public and private socially and economically beneficial investments and solidarity mechanisms.   

Democratic accountability and social acceptance, through transparency and concrete dialogue at all stages of the EU institutions with the member states, especially the National Parliaments and the social actors is necessary. The decisions concerning fiscal, economic and reform policies should always lie with democratically-elected bodies and governments. The democratic control of the European Central Bank has to be enhanced by a radical change in its statutes and guidelines, including by ensuring the equal participation of states in its Board.

In conclusion, the Five Presidents' report is neither ambitious nor pragmatic. In a "business as usual" way, it proposes cosmetic changes and over-optimistic implementation stages, which clearly are not a solution for the citizens of the EU and the Eurozone, where imbalances, high unemployment and poverty continue to rise.                


Co-signed by:
 
- Marisa Matias (Bloco de Esquerda, Portugal)
- Rina Ronja Kari (Folkebevaegelsen mod EU, Denmark)
- Dimitris Papadimoulis, Stelios Kouloglou, Kostas Chrysogonos, Kostadinka Kuneva, Sofia Sakorafa (SYRIZA, Greece)
- Gabriele Zimmer, Fabio De Masi, Thomas Händel, Cornelia Ernst, Sabine Lösing, Martina Michels, Helmut Scholz (Die Linke, Germany)
- Patrick Le Hyaric, Jean-Luc Mélenchon, Marie-Christine Vergiat, (Front de Gauche, France)
- Pablo Iglesias, Lola Sanchez Caldentey, Tania Gonzalez Penas, Estefania Torres, Miguel Urban Crespo (PODEMOS, Spain)
- Katerina Konecna, Miloslav Ransdorf (Komunisticka strana Cech a Moravy, Czech Republic)
- Marina Albiol Guzman, Javier Couso Permuy, Paloma López Bermejo, Ángela Vallina, Lidia Senra Rodriguez (Izquierda Plural, Spain)
- Josu Juaristi Abaunz (EH BILDU – Basque Country)
- Merja Kyllonen (Vasemmistoliitto - Finland)
- Matt Carthy, Martina Anderson, Lynn Boylan, Liadh Ní Riada (Sinn Féin, Ireland)
- Stefan Eck (independent, Germany)
- Curzio Maltese, Eleonora Forenza (L'Altra Europa con Tsipras)