THE FAILURE of European leaders to sanction Germany and France for their violations of fiscal discipline sends a clear message to the acceding countries set to join the EU in May 2004 - the big players of Europe only play by the rules when it serves their interests. New EU members should therefore work together to keep their influence in the future EU to the very minimum.
On November 25 the Council of European Economy and Finance Ministers agreed that the 2004 state budget deficits of Germany and France surpass three percent of GDP for the third year straight - a breach of the European Stability and Growth Pact, intended, among other things, to ensure the stability of the euro. No financial sanctions were imposed on either for their failure to comply with their obligations.
The news comes at a time when the Slovak parliament is just getting ready to debate the Slovak draft budget for 2004. At the start of the talks, the government finds itself in an extremely difficult position.
The coalition officially holds 75 out of 150 seats in parliament, the co-ruling Hungarian Coalition Party (SMK) asks for more funding for agriculture; former Defence Minister Ivan Šimko, the current head of an unpredictable platform within the PM's Slovak Democratic and Christian Union (SDKÚ), says more money is needed for the army; and the opposition has made it clear it will not support the draft budget.
Others in the coalition have also indicated that they have other priorities than looking out for the fiscal deficit. "Money necessary for investment incentives has to be found somewhere in the budget. Either we find a solution, or there will be a problem with passing the budget," said Economy Minister Pavol Rusko in October, adding that he doesn't find it necessary to "keep the deficit down at all costs".
Rusko has since repeatedly asked for financial support for incentives, and one such request resulted in an open dispute with the Finance Ministry this week.
So far, Finance Minister Ivan Mikloš has been firm in his determination to keep the 2004 state deficit under 3.9 percent of GDP, arguing that meeting the Maastricht criteria for entering the European Monetary Union (EMU) is his top concern.
After the recent European decision, those in parliament deciding on the fate of the budget are likely to have less understanding for Mikloš's efforts to introduce better fiscal discipline, and are also likely to be encouraged to ask for more cash for their particular interests.
The developments should cause Mikloš to carefully consider whether his aim to enter the EMU in the shortest time possible should stay in place even if his European counterparts do not seem to share his responsible attitude to fiscal policy.
Swedish Finance Minister Bosse Ringholm correctly pointed out for the Reuters newswire that violations of the rules make it difficult to persuade citizens in countries not involved in the EMU to support the introduction of the common currency.
Unfortunately, Slovakia and other candidate countries had to agree with the introduction of the euro when they agreed to enter the Union, and now can only decide on the time frame. It now seems smart to wait.
It must not be forgotten that the 15 present members and 10 acceding members are currently debating the future constitutional arrangements in the EU. France and Germany are among the countries asking for a strong EU. The failure of influential European players to keep their word and the failure of others to stand up to them shows that, for now, there should be no rush to experiment in the field of defence or common foreign policy, because history tends to repeat itself and Slovakia may find itself involved in things it never agreed with.
1. Dec 2003 at 0:00