Six-pack deal reached as France backs down

Member states give in to Parliament’s demand.

They got there in the end. The deal reached by finance ministers of the European Union on Friday (16 September) on new economic governance legislation ended a tortuous 12 months of argument and compromise. 

The package of new laws, dubbed the six-pack by Olli Rehn, the European commissioner for economic and monetary affairs, should have been finalised before the summer, under Hungary’s presidency of the EU’s Council of Ministers. It was not, and a series of meetings, political horse-trading and false breakthroughs came and went before member states and MEPs finally reached a settlement , more than two months into Poland’s presidency.

Pressure had been mounting on member states to give in to the main demand from MEPs over the extent to which sanctions for countries that breach debt and deficit rules should be automatic. A group of countries led by France wanted a system to be introduced in which a qualified majority of member states would have to give their approval before the European Commission could issue a ‘final warning’ to countries – the last step before imposing sanctions.

Lower priority

The momentum for a deal was beginning to ebb away towards the end of Hungary’s presidency. One source close to the discussions acknowledged that by June, this was seen as far less of a priority for member states than it had been a couple of months previously. But by the time that the leaders of the eurozone got together in Brussels on 21 July, with the strains of the debt crisis beginning to show once more, and so many new issues to worry about (a second Greek bail-out, bank recapitalisations, private-sector involvement in bail-outs), weariness over this one outstanding problem was palpable. By the time politicians came back from their summer breaks, frustration over the stalemate had long leaked into the public arena, from Rehn to Jean-Claude Trichet, the president of the European Central Bank.

MEPs’ new powers

Talks between the European Parliament and the Council have since take place almost on a daily basis, at least informally. France signalled a fortnight ago that it was willing to back down. It is a significant victory for the Parliament. This was the first time since MEPs were given the power under the Lisbon treaty that they had been called upon to decide on a matter of macro-economics on a footing equal to the Council. They were determined not to waste it. Finally, on Friday, at the informal meeting of finance ministers of the EU in Wroclaw, participants agreed that they could live with the stance favoured by the Parliament. Under the deal, France’s idea was reversed: national governments will only be able to block the Commission’s final warning if a qualified majority of member states vote for that, an altogether more difficult and timely process.

In truth, the six-pack has little relevance amid the tumult of the current crisis. These are preventions for tomorrow, not cures for today. What is more, they are already in danger of being overshadowed by the “economic government” ideas espoused by France’s Nicolas Sarkozy and Germany’s Angela Merkel, first at the 21 July European Council and then at their bilateral meeting in Paris on 16 August, when the crisis looked as though it was about to turn cataclysmic.

‘Significant step forward’

Now all that remains to be done, during further talks between Parliament and Council negotiators this week, is to refine the details. It should be voted on in the Parliament’s plenary on 28 September. “It’s very important that this chapter is finalised,” Jan Kees de Jager, the finance minister of the Netherlands, told European Voice after the conclusion of Friday’s meeting. “This is a significant step forward.”

The Netherlands, along with other relatively parsimonious northern European countries, had, during the discussions, always identified with the tougher talk of Parliament. And Kees de Jager made it clear that this was not the end of the matter. “It’s necessary to go even beyond this,” he said. “This first step is in the right direction, but afterwards we deem it necessary that they have to take a further, very big step.” Given the prolonged negotiations on the six-pack, that next big step will not be any time soon.