Euro Update (16): Mario Monti and the feckless Franco-German Pact for Competitiveness

From left to right, the last panel at yesterday’s Policy Network “What future for Europe?” event was a gathering of eminences. Sitting in a row, Nadia Calvino, Lazlo Andor, Vince Cable, Peter Mandelson, Mario Monti and Dieter Helm took their turns to speak about the state and the future of the single Market. Ms Calvino and Mr Andor used the platform to describe present efforts, Mr Cable used the platform to declare intentions, Mr Helm present fresh proposals for reforming and integrating energy grids and Mr Mandelson and Mr Monti used it to simply comment on the present state of the single market. Although Mr Helm’s contribution was particularly interesting, and Mr Cable’s welcoming of all the Chinese investors was very insightful into our times, the comment that most caught my attention was Mr Monti’s. Most of his address was a delivery of his stump speech on the Single Market, summarising his report, highlighting the need for better compliance from most countries and the need for extending the single market into other goods, particularly the energy and services sectors. However, at the end, he updated some of his comments a little. He commented on the basic irony of a two speed Europe where the least integrated were the best integrated, meaning that it was the countries outside the Eurozone who best complied with and enforced the rules of the single market.

He then said some words about the new Franco-German Pact and about how many of its items are single market issues. This was an issue which was addressed through out the conference where many speakers feared that the emerging two speed Europe would create problems in the governance of the single Market as some of the new economic rules were single market rules that would only apply to the Eurozone countries. Mr Monti’s contribution was insightful in two ways. First, he clearly identified those items which concern the single market: The mutual recognition of professional qualifications, the reduction of the retirement age and the end of of wages indexation to inflation. From here he then went on to argue that for all the debate about the quality of these and the other proposals, the problem was that they did not represent a credible commitment. I have to admit that I was very proud of myself when he then went on to argue that in their lacking of involvement of the European Commission, these proposals were equivalent to the SGP, which was destroyed by the compliance failure of France and Germany back in 2003. This has been my argument ever since Franco-German Pacts have started coming our way (I made it here and slightly more vehemently here):

“If we have learned anything since the creation of the Eurozone and the misfit application of the SGP, it is that indeed we are not at all equal. Several countries have failed their SGP obligations. Portugal in 2002, Germany and France in 2003, Italy and the Netherlands in 2004 and finally Greece in 2005 all failed to live up to the SGP. The only country that ever came close to being punished was Greece. When the problem hit France and Germany they decided to change the rules. That’s why we are now talking of the SGP3 rather than SGP2. As Caballero, Cababllero and Losada 2006 and Chang 2005 describe, Germany and France are clearly more equal than the rest of the Member states. Call them primus inter pares. As Thornhallson 2006 explains this is understandable. However, it is morally highly objectionable. It should be clear to anyone dedicating even a minute of their time to the ongoing debate about the reform of the SGP, that although France is endorsing a German proposal to withdraw votes from countries not fulfilling their obligations under the SGP, neither France nor Germany will ever let other countries do that to themselves. This is a policy for others and shamefully so.”

A pity no one in the media seems to have picked up Monti’s comment. It would embarrass Merkel and Sarkozy and hopefully start a debate about the need for enforcement and the necessary roles to be played by the European Commission and the European Court of Justice in order to ensure credibility of commitment in the enforcement of the rules across the board.

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This entry was posted in Current Events, Euro-zone Update, European Interdependences, Media Coverage, Sovereign debt Crisis. Bookmark the permalink.

2 Responses to Euro Update (16): Mario Monti and the feckless Franco-German Pact for Competitiveness

  1. Pingback: bloggingportal.eu Blog & Support » Blog Archive » The Week in Bloggingportal: Viva la Revolution!

  2. Pingback: The “grand bargain” and the principles of European decision-making | Bruegel

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