Fiscal treaty more about 'self-control' - Van Rompuy

Thu, Feb 2, 2012, 00:00

EUROPEAN COUNCIL president Herman Van Rompuy said the new fiscal treaty was more about “self-control” than austerity, as MEPs criticised Europe’s response to the debt crisis.

At a hearing in the European Parliament on Monday’s EU summit, Mr Van Rompuy made the case that the “debt-brake” in the treaty was an important confidence-building measure.

“This is not a commitment to austerity, but a commitment to financing public expenditure through revenue rather than debt,” he told MEPs in Brussels.

“There is nothing virtuous about excessive debt – it means that more and more of your public expenditure is spent on servicing your debt instead of on public services and public investments.”

As British Eurosceptic MEPs criticised the pact in strident terms, German members from chancellor Angela Merkel’s CDU party intervened to defend it.

“Mrs Merkel is fighting for discipline, structural change and for growth,” said Elmar Brok.

“If you forget discipline then you are destroying the future of coming generations.”

Martin Callanan, leader of the British Tories in the parliament, said the treaty would remove the right to vote for “high-spending Keynesian” economic policies.

“We are making socialism illegal. This pact is effectively rendering all elections null and void across much of Europe,” he said.

United Kingdom Independence Party MEP Nigel Farage claimed the treaty would “destroy and humiliate nation states that do not live up to a Germanic view of how economies ought to be run.”

He suggested German proposals to send an EU budget commissioner to Greece with powers to override its government brought to mind gauleiters of the Nazi-era, as the party’s senior officials were known.

This prompted an angry response from German MEPs and a rebuke from parliament president Martin Schulz, himself a German.

“Nationalism is propagated in this house by those who wear flags upon their desks and their nationalism upon their sleeve and I believe you’re one of them.”

Fine Gael MEP Gay Mitchell called for a new definition of what the market economy should stand for. “We’re in a situation where – it appears to me – the private sector is regulating the public sector and there’s very little accountability.”

British Liberal Sharon Bowles, chairwoman of the economic and monetary affairs committee, said people should not be deceived because the mood in the euro zone had lifted due to European Central Bank liquidity operations.

“Potentially €2 trillion-plus being sucked up by the banking system by next June should tell us some kind of transfer already is going on,” she said. “The question is: will this generation face up to it or foist it along with joblessness onto the younger generation?”

European Commission chief José Manual Barroso said the new treaty, an intergovernmental pact operating outside EU law, was not the commission’s choice.

“In the final text, there are no new institutions that could weaken the role of the commission and of this parliament,” he said. “The contracting member states agreed to respect the commission’s central role in delivering the agreement’s objectives in line with the Lisbon treaty and the community method.”