With the city of Santiago de Compostela as the monumental setting for one of the most momentous decisions that the European Union will have to take this year, the new fiscal rules of the euro zone, the Spanish presidency set out in September to close a first agreement at the meeting of October ministers. A few days before the appointment, the Spanish Government has however encountered the same thing that many pilgrims experience, the reality that the goal, the final destination, is further away than it seemed.
The latest compromise proposal presented by the team of the vice president of the Government and acting Minister of Economy, Nadia Calviño, has not raised the expected consensus among the Twenty-seven, which remain divided into two large blocks. On the one hand, the one led by France and Italy, which ask to make the application of the rules more flexible and leave room for governments to invest in the energy transition and be able to compete with China or the US. And, on the other, Germany, which rejects the discretion of the system proposed by Brussels in which each country will receive a tailored deficit and debt reduction path, a position that has the support of some 13 countries.
The distance between both positions, explain several European diplomatic sources, is too wide to attempt to reach a principle of agreement or general orientation at the meeting of European Economy Ministers that will take place next Tuesday in Luxembourg. The Spanish presidency has not yet revealed whether it will present a new proposal to the capitals before the meeting but, in any case, the matter only appears as a topic to be discussed during lunch.
Although points of agreement are beginning to emerge, for example on the possibility of excluding certain items from the calculation, such as defense spending, differences persist on key issues such as debt reduction reference values. Berlin has hardened its stance and warns of the risk that the markets will go back to the euro if the new version of the stability pact does not have sufficient credibility.
“We need credible fiscal rules for the financial markets,” warned the German Finance Minister, the liberal Christian Lindner, yesterday. “The stability of our economy is at stake,” he commented on the sidelines of the International Monetary Fund meeting in Morocco. “A bad agreement would not be a good sign for the markets,” added the president of the Bundesbank, Joachim Nagel. “I don’t want to speculate on how the markets would react in the event of a no-deal.”
The EU suspended the application of the stability pact at the beginning of the pandemic and, later, due to the war in Ukraine, but as of January 1, 2024, the European Commission must reapply it, reformed or not. The goal remains to reach an agreement this year. Also the negotiation to elect the new president of the European Investment Bank, a position for which Calviño is a candidate, has stalled. Neither the Spaniard nor her main rival, the Danish Margrethe Vestager, have enough votes to win the position. The lack of definition in Berlin (Chancellor Olaf Scholz supports the Spanish and Minister Lindner, the Nordic liberal) contributes to keeping the process blocked, which does not rule out resetting to start from scratch in the hope that one of the 5 candidates will win. remove.
