A FISCAL agreement was the only way to respond to the current crisis in Europe: that is how Slovak Prime Minister Iveta Radičová summed up the closely watched summit of European leaders held on December 8-9 in Brussels. Finance Minister Ivan Mikloš left no room for doubt over where he wants to see Slovakia in the event that divisions within the eurozone or the European Union deepen: on December 13 he stated that Slovakia fully supports the basic direction that most European Union member states have agreed to take. That basic direction, in Mikloš’s words, is “to build a fiscal union through strengthening the rules and their enforceability”.
The summit produced a deal on a treaty concerning fiscal discipline among 23 EU member states, including Slovakia, while the United Kingdom vetoed an EU-wide deal and three other countries, Sweden, the Czech Republic and Hungary, said they would refer the deal to their parliaments.
“The only response to the current crisis was a fiscal agreement of all the countries aimed at respecting the agreed rules and at the same time a mechanism for how to enforce these rules,” Radičová said on December 9.
Nevertheless, Mikloš said he does not envision the agreed approach as being “to build some huge central institutions” and does not expect Europe-wide taxes either, or eventual “great redistributions or support for irresponsibility”, but rather “pressures for responsible policies and necessary reforms”.
Radičová sees the deal’s important aspect as being that it involves a commitment by participating countries to adhere to agreed rules while at the same time establishing a mechanism to enforce those rules, the TASR newswire reported.
According to the prime minister, the fundamental shift in the fiscal agreement is that the rules and principles are enforceable, controllable and monitored from their very inception via measurement of proposed and implemented budgets and reforms.
She said that the medium-term measures, including an initiative to set up the permanent ESM bailout facility, with planned firepower of €500 billion, would need to be implemented by July 2012. The permanent bailout facility would start functioning one year later.
A package of prompt measures to calm the crisis, including the amendment of the temporary bailout facility and accelerated establishment of the ESM, should be discussed at a summit in March, Radičová added.
The changes will not require amendment of the Lisbon Treaty, but will instead take the form of an inter-governmental agreement; according to Radičová, other European countries can join the new system at any time, the SITA newswire wrote.
Former European commissioner and current leader of the Christian Democratic Movement (KDH) Ján Figeľ said that what the eurozone needs is to have its processes made “more dynamic”. He said that the weak ability of the single currency area to act is one of the key problems.
Leaders at the summit tried to calm the financial markets and introduce measures which would at least add an element of greater reliability and predictability to the behaviour of the eurozone members, according to Vladimír Bilčík, a political scientist specialising in European issues at the Slovak Foreign Policy Association.
“The summit actually brought much smaller changes to the existing extent of control by member states compared to the initial proposals, which came out of a joint Franco-German initiative,” Bilčík told The Slovak Spectator.
“Essentially, the question of the veto was only discussed in relation to future decisions over the use of the so-called bailout fund: the European Financial Stability Facility,” Bilčík said, adding that the veto will be maintained on other isuses.
