Europe’s dog in the night­time

Korea JoongAng Daily - - Opinion & Perspectiv­e -

To see why, it is worth re­call­ing that the SGP’s orig­i­nal rules were judged “stupid” by one for­mer Com­mis­sion pres­i­dent (Ro­mano Prodi), be­cause the sin­gle­minded pur­suit of a deficit be­low 3 per­cent of GDP could be in­ap­pro­pri­ate dur­ing re­ces­sions. That ar­gu­ment was ac­cepted, and the SGP was sup­pos­edly ren­dered more “in­tel­li­gent” by, for ex­am­ple, per­mit­ting bud­get deficits to be ad­justed for the eco­nomic cy­cle, adding medium-term ob­jec­tives for ex­pen­di­ture, and in­tro­duc­ing es­cape clauses.

The rea­son for this ad­di­tional levy is that a few weeks ago the UK’s Of­fice for Na­tional Statis­tics an­nounced, proudly, that it had dis­cov­ered that the coun­try’s gross na­tional in­come (GNI) had been much higher than pre­vi­ously as­sumed, not only in 2013, but also in all pre­vi­ous years. In­clud­ing the re­vi­sions for the 2002-12 pe­riod, the dif­fer­ence comes to about 350 bil­lion pounds ($560 bil­lion).

Be­cause ev­ery EU mem­ber state is obliged to con­trib­ute about 1 per­cent of its GNI to the Union’s bud­get, the United King­dom’s data re­vi­sion had to lead to a back pay­ment of bil­lions of euros. But Bri­tish Prime Min­is­ter David Cameron’s gov­ern­ment has de­clared that it does not in­tend to pay money that “the Euro­pean Com­mis­sion was not ex­pect­ing and does not need.”

Th­ese two cases — the dog that should have barked but did not, and the dog that barked for no rea­son — threaten the EU’s fun­da­men­tal work­ings, which are based on a clear rule­book en­forced vig­or­ously by a strong Com­mis­sion. Juncker’s Com­mis­sion risks los­ing its au­thor­ity from the start if the rules can be bent or bro­ken to ac­com­mo­date the larger mem­ber states’ do­mes­tic po­lit­i­cal pri­or­i­ties.

The Com­mis­sion must re­gain po­lit­i­cal and in­tel­lec­tual lead­er­ship and make its choice: ei­ther ex­plain why the SGP rules must be fol­lowed even now, in the face of de­fla­tion, or agree with those who ar­gue that the cur­rent en­vi­ron­ment calls for a fis­cal stim­u­lus. It can­not avoid tak­ing sides by in­sist­ing pub­licly on aus­ter­ity rules but then ac­qui­esc­ing when mem­ber states break them.

Lead­ers in mem­ber states have to play their part as well. Pan­der­ing to pop­ulists may be at­trac­tive in terms of short­term elec­toral gains, but the long-term cost in terms of cred­i­bil­ity, both their own and that of the Euro­pean Union, will be very high.

Newspapers in English

Newspapers from Korea, Republic

© PressReader. All rights reserved.