EUROPEAN COMMISSION chief José Manuel Barroso will ask EU leaders to invoke powers already enshrined in European law to deepen their policy co-ordination in a new EU economic plan.
Citing the danger that Greece’s fiscal problems would damage other euro members as well as the rising competition from China and Brazil, senior commission sources said Mr Barroso has resolved to ask EU leaders to increase oversight by Brussels of their economic policies and performance.
The legal measures he has in mind for the Europe 2020 plan would empower the EU executive to issue public warnings and policy recommendations to states should their performance fall short of targets set out in the plan.
Such powers are already deployed in the Stability and Growth Pact, which closely monitors economic performance on a day-by-day basis. Mr Barroso wants to invoke similar measures as EU leaders frame a successor to their 2000-2010 economic programme known as the Lisbon Strategy, famous for high ambition and missed targets.
Even though EU leaders resisted moves five years ago to deepen economic co-ordination, well-placed commission sources said Mr Barroso believes the climate has now changed as a result of the financial crisis and rising might of the Chinese economy.
Germany, however, has resisted suggestions from Spain’s presidency of the EU that fines be imposed on states if they failed to meet standards. Mr Barroso does not propose the introduction of new sanctions, the sources said.
They said Mr Barroso understood German resistance to deeper policy co-ordination flowed from its resistance to any measures that would dilute the independence of the European Central Bank. He has no such measures in mind, they said.
The implication is that Mr Barroso will seek a mandate from EU leaders for the commission to adopt a much tougher approach with members in order to ensure adherence to reasonable medium-term economic goals.
The sources would not speculate on the prospects of Greece receiving any bailout from the union should it default on its debts.
However, they said Mr Barroso and the European authorities were convinced that a resolution of Greece’s fiscal problems was within the union’s capacity and added that they saw no prospect of International Monetary Fund intervention in the country.
Among the clauses in the European treaties that Mr Barroso wishes to deploy is one that allows the commission grant, under certain conditions, EU financial assistance to a member state facing difficulties or “seriously threatened with severe difficulties” by exceptional occurrences beyond its control.
However, EU law prohibits overdraft facilities for a member state from the ECB.