Pearly -
telegraph.co.uk
Prodi urges Brussels to tighten grip on the euro
By Ambrose Evans-Pritchard in Brussels
ROMANO PRODI, the European Commission's president, demanded greater economic powers for Brussels yesterday, and gave warning that the euro could fail unless the tax and spending policies of member states were brought under tighter European Union control.
Speaking in Paris the day after the French Prime Minister, Lionel Jospin, called for a European "economic government", Mr Prodi said the single currency would remain vulnerable as long as each country was able to run a separate budget policy in its own national interest.
He said: "Without continuous integration, the single market will disintegrate and the euro won't be able play the global role for which we created it." The comments will be seized on by opponents of the euro, who have long said that abolishing the pound would entail an end to Britain's control over fiscal policy as well.
Mr Prodi said the time had come for Europe to move beyond the single market and construct a fully-fledged "political union", with the diplomatic and military reach of a world power, capable of asking its citizens what they are "willing to die for together".
He called for the creation of a "Mr or Ms Euro" to speak for the single currency abroad alongside the union's High Representative for foreign policy, saying the union was failing to punch according to its weight because of its ramshackle way of doing things. In contrast to Mr Jospin, he said both jobs should be brought under the roof of the European Commission, the only body that can represent the collective interest.
In a move that is likely to inflame the election campaign in Britain, Mr Prodi also proposed a special union tax earmarked for the European Commission's £62 billion annual budget. He said that this would establish a clear democratic link between taxing and spending in Brussels, and would counter the "irrational" belief that the union gobbles up money.
At the moment, the union is financed with money raised from a mixture of excise duties, VAT receipts, sugar levies, and top-ups based on gross domestic product (GDP), a combination that leads to constant bickering between member states. About 10 per cent of the total union budget is paid by Britain, compared with 25 per cent by the Germans.
On fiscal policy, Brussels monitors the budgets of each country to ensure that they comply with the Stability Pact, including Britain, Denmark and Sweden, though they are outside the euro, and can even fine states that run deficits of more than three per cent of GDP.
When Ireland went ahead with a pro-growth budget earlier this year, the commission went so far as to invoke the "nuclear option" of Article 99 which authorises the union to take action to protect its collective interests.
Mr Prodi, however, who trained as an economics professor in London before he went into politics, said it was now necessary to go further. "We must think about what the "E" means in Economic and Monetary Union: the national budget policies are still too often conceived on the basis of national interests, while the euro puts us in the position of sharing the risks."
Exactly who decided that this loon could be allowed to run around loose? -g-
Regards, Don |
