Brussels spares deficit sinners yet again

Spain and Portugal need not fear any reprisals for their large deficits for the time being. The European Commission has postponed its decision on sanctions until July, and Italy has also been given more leeway on debt. Are the current rules on budget discipline obsolete?

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De Telegraaf (NL) /

Brussels too lenient with unruly states

In the view of De Telegraaf Brussels has failed as regards budgetary discipline:

“Spain is on the brink of new elections. A new government has just taken over in Portugal. There's always some excuse. Brussels has never imposed sanctions. France and Germany set the trend for this in the middle of the last decade. Unable to meet the criteria, they simply broadened them. In the meantime the European Central Bank is making sure that even the naughtiest boys in the class can borrow money at very low interest. Brussels has failed utterly as the strict headmaster. This proves once more how important it is to make sure the far more stringent International Monetary Fund participates in future bailout programmes for insolvent Greece: without thoroughgoing reforms the country will remain a bottomless pit.”

Zeit Online (DE) /

Eurozone will fail without new regulations

Zeit Online demands new set of rules for the monetary union:

“It is to be feared that after their triumph over German austerity the Europeans will get used to the idea of not sticking to the rules at all. … Without minimum adherence to rules, a monetary union made up of predominantly sovereign member states can't function. If everyone just thinks of their own interests the euro will soon be history. So what is the logical conclusion? Europe needs rules that meet the requirements of the continent with its different cultures and traditions. Not everything that works in Germany will work in Italy or Spain. And certain political strategies can only work out in a national context. … Rather than insisting on pushing through the current rules or ignoring them completely the thing to do is to Europeanise them.”

Neue Zürcher Zeitung (CH) /

Arbitrary regulations

Why does the EU make rules if it doesn't stick to them? the Neue Zürcher Zeitung wonders:

“With all the reforms the pact has become so complex that, just as with last year's generous extension for France, legal bases can be found for all of this (as well as for the opposite). Nevertheless the decisions are becoming increasingly hard to understand. Regarding the debt criteria it must be added that in reaction to the shock of the debt crisis the EU has done so much to tighten the requirements for debt reduction that many economists believe a highly indebted country could never fulfil them. But if that is true the Commission and the member states should get to work correcting these regulations instead of simply not applying them. Regulations that come across as non-transparent and arbitrary do not fulfil their objective.”

El País (ES) /

Germany, and not Spain, is the culprit

El País praises the move to postpone sanctions against Spain as a wise decision:

“Brussels is right to repeat that Spain needs further adjustment programmes because in this way it strengthens its arguments for future negotiations. But it would be wrong to impose austerity measures regardless of the consequences. The main problem with the euro is not the failure of Spain - frequently held up as the model pupil of Europe by those who are now insisting on sanctions - to meet its targets, but the evident congenital defect of a single currency in which all the member states are obediently adhering to a rigid austerity policy from which they derive no benefits. Germany has been turning a deaf ear for years to the recommendations of reputable institutes (like the International Monetary Fund) that it turn its surplus into investments. No one benefits from its savings deposits, not even Germany itself.”

Jornal de Negócios (PT) /

What hypocrisy!

Portugal has been given a reprieve only because the Commission is focussing on Spain right now, columnist Fernando Sobral comments in Jornal de Négocios:

“It is unbearably hypocritical of EU Economic Affairs Commissioner Moscovici to declare now that this is not the right time 'economically or politically' for sanctions. … With this decision the Commission is simply waiting for the results of the elections in Spain - and hoping that head of government Mariano Rajoy will emerge as the winner. … So this is a purely ideological decision: for reasons of political strategy (from which the European People's Party benefits) the Commission is once again postponing the assault on the Portuguese government that has been on its agenda for some time now.”

La Repubblica (IT) /

Commission lenient thanks to Berlin

Germany's lack of interest in punitive measures for countries that have failed to meet their debt reduction targets is the reason why the European Commission is being so lenient towards Italy, La Repubblica suspects:

“Italy remains 'under observation' in the expectation that Renzi's reforms will start to have the promised effect, but Merkel and Schäuble have given the country another six months. One of the reasons for this is of a political nature. In a precarious context, with Britain about to hold its Brexit referendum, with the National Front breathing down Hollande's neck, with Spain out of action because of new elections and with the biggest countries in Eastern Europe taking a maverick line, for Angela Merkel Italy is the only major European state with a halfway stable and reliable government. … The other factor determining Berlin's stance, but only off the record, is that if Italy is forced to introduce corrective measures for falling slightly short of the budget deficit reduction target the European Commission would have to penalise Spain and Portugal too.”

More opinions

Les Echos (FR) / 19 May 2016
  Eurozone needs clear rules and more integration (in French)