Politics

Is the Fiscal Compact Just a Waiting Room for Euro Members-To-Be?

Ds 2012:30, a report containing the governments proposition for the Riksdag to ratify the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union is a strange document. Page after page, the government underline the fact that, even if the Riksdag ratify the treaty, Sweden will not be subject to any obligations as Sweden has not adopted the euro. On the face of it, the argument seems to stand. The treaty’s rules about budgetary equilibrium and low state debt only apply to the euro countries and the non-euro countries who willingly decide to follow the proposals in the treaty, whether entirely or in part. Denmark, whose krone is already pegged to the euro, has outlined their intention to do just this.

What is the value of a ‘yes’?

But Sweden, by contrast, has clearly denied any such intention and according to Ds 2012:30 a new Riksdag act would be needed if Sweden were to consider voluntarily adopting these rules in the future. So why should the Riksdag not vote yes to ratify a treaty that does not impose any conditions or demands on Sweden? But then again, why vote yes to such a treaty either? Why pretend to be in the club when you are not? Why did Sweden’s government sign the treaty when Great Britain and The Czech Republic did not? Is there something fishy going on? Gösta Torstensson writes in Kritiska EU-fakta that “the fiscal compact is a waiting room for euro members-to-be”.

Despite the no vote to the referendum in 2003 and the euro crisis there is a niggling feeling in the alliance government and the Social Democratic Party that Sweden is “being left out”, that really we should be in the EMU. This is why there has been a reluctance to follow Britain and the Czech Republic, but also to follow Denmark. Instead, a middle-of-the-road approach has been adopted, sitting cautiously on the fence and getting as involved as possible without having to commit to anything but close enough to be able to join the team were the situation and public opinion suddenly to shift in that direction. Is it “green” to stay on this course and vote for ratification? It is not certain. The fiscal compact has provoked fierce debate among the Greens in France. After extensive discussions, a n assembly of party delegates for Europe Ecologie – Les Verts (EELV) decided with a 70 per cent majority to vote no to the fiscal compact and called on their Members of Parliament to also vote no.

French Greens guarding their independence

As the French Greens have two ministers in government, the question of course arose whether this meant that their cooperation in government should be discontinued. Daniel Cohn-Bendit, chairman of the EU Parliament’s Green group, was furious and explained that his affiliation with the French Greens was provisionally suspended. He saw the no vote to the fiscal compact as representing a break with the euro-federalist position of the French Greens. However, he seemed to have forgotten that the French Greens were sceptical both of the EMU and the EU Constitution, as the euro-federalism of EELV has never been unconditional, but rather has been conditional on the EU remaining committed to a progressive politics. One of the leading economists among the French Greens, Alain Lipietz, has argued at length about why it is green to vote no to the fiscal compact.

He highlights the fact that the fiscal treaty lays down even more severe rules for austerity measures than the EMU, as instead of limiting the deficit threshold to 3 per cent it places it at 0.5 per cent. Moreover, the treaty demands an annual decrease of state debt by one tenth, which will prohibit the normal borrowing (=indebtedness) required for the kind of proactive investments in new forms of energy, new transport models and so forth which are needed for an ecological restructuring.

Interestingly enough, EELV’s leadership claims, moreover, that the party’s no to the fiscal compact in no way necessitates the green ministers’ resignation. No, he argues, parties and parliamentary groups must be allowed some freedom of action, if politics is not to become completely rigid and stagnant.

Even a governmental party must have the right to act on its convictions and make them known! In conclusion, it is not necessary to vote yes to indicate any sort of EU realism. EELV is far more positive on the EU than the Swedish Green Party in its fundamental approach but will not accept the EU being used as a tool for austerity measures and anti-social politics. It is not necessary to vote yes to demonstrate competent governance. EELV is sitting in government and still says no, without losing their ministerial posts. On the contrary, as EELV underlines, saying no to the fiscal compact is one way to show that you realise that the economic crisis is not only financial but also ecological.

Avoiding the Mistakes of the Past

Ultimately, what is at issue is the fact that our model of society has reached a breaking point; what is needed now is restructuring, but this cannot be achieved through austerity measures alone. Many environmentally hazardous companies must be pared down and their number must be significantly reduced. But at the same time investment is needed in new ecological forms of production and this requires borrowing, which means a deficit in the budget over a transition period. The EU’s fiscal treaty points in the opposite direction. It wants to penny-pinch its way out of the crisis. This is what was attempted in the 1920s. It was a disaster and paved the way for Hitler’s fascism, which of course not only mass-murdered Jews but also built motorways and eliminated unemployment. What we need now is a Green New Deal both to ensure the survival of humanity and to prevent the racists of our day from taking advantage of the social crisis. But the fiscal compact is pointing in the opposite direction. This is why the French Greens are voting no. This is why Sweden, too, should vote no.

This article was originally published by Cogito

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