Economic policy: more coordination, more solidarity

Régis Dandoy

Greek crisis: an almost unconditional solidarity

Belgium largely agreed to contribute to the European effort to financially sustain Greece, and very few political parties expressed their opposition. The Belgian aid will take the form of coordinated bilateral loans and will constitute 3.58 percent of the global effort. The Minister of Finances, Didier Reynders, assessed the Belgian contribution to 1,074 billion Euros.[1] But although Belgium’s solidarity with the Greek people and government was not much discussed,[2] there is a concern that this contribution would have a significant impact on the Belgian public debt (which is estimated to be about 109 percent of Gross Domestic Product in 2013). The fear, shared by many political parties, is that Belgium itself would be in the same situation as Greece, because of the important public debt and the current political and institutional crisis. The federal government and particularly the Minister of Budget, Guy Vanhengel, restored confidence claiming that the Greek and Belgian public debts and economies are very different, as economic growth is larger in Belgium and its unemployment rate is smaller than Greece’s.[3]

Much criticism was voiced in Belgium against the decision-making process at the EU level. For example, the former Prime Minister and current Member European Parliament, Guy Verhofstadt, criticised the slow decision-making process and European cacophony, as well as the overly long discussions on the way to solving this problem.[4] This position is shared by many other actors, who complained about the delayed reaction from EU institutions that deteriorated the situation in Greece, and many Members of Parliament, among others from the majority, Hendrik Bogaert (Christian Democratic and Flemish – CD&V) and Jean-Jacques Flahaux (Reformist Movement – MR), accused Germany for being responsible for this delay.[5] Belgium is, in fact, divided towards the German position in this regard. Many politicians criticised the doubts expressed by Angela Merkel – among them the Prime Minister, Yves Leterme, who publicly denounced the lack of responsibility displayed by Germany.[6]

A reinforced economic governance

There has not been much discussion on the eventual reform of the EU’s economic policies and institutions, partly because the main political actors focused their attention on the political and institutional crisis at the federal level. Nonetheless, some political actors drew conclusions from the Greek case and stressed the need to review some of the processes. Even without making any substantive proposal, the Minister of Finance, Didier Reynders, thinks that the monetary pillar (that is linked to the policy of the European Central Bank) and the budgetary and economic pillar (still based on intergovernmental coordination) should both be better integrated. He is also in favour of the installation of a new subsidiary of the European Investment Bank, which could intervene in matters regarding the financial problems of member states.[7] According to Guy Verhofstadt, a new mechanism is needed at the European level, combining three elements: the creation of a European Monetary Fund, which would be controlled by the European Commission, the creation of a Euro Bond Market, and the development of a real economic pillar and strategy in the Eurozone. In addition, the European Commission should be given a real leadership and orientation capacity regarding the economic governance.[8]

Europe 2020: the lack of a social Europe

The main criticism that was addressed to the Europe 2020 Strategy is the lack of a real social pillar. Poverty should indeed become one of the main targets, but a social Europe should encompass other dimensions, such as strong social security, an inclusive labour market, a decent minimum salary and access to quality services.[9] In addition, the current poverty indicator should be completely revised and enlarged. As Belgium will hold the rotating presidency of the EU starting on 1 July 2010, poverty will be one of its transversal priorities by creating an authentic partnership with the field actors. Guy Verhofstadt also criticises the Europe 2020 Strategy that, in his eyes, is merely a new packaging of the “old” Lisbon Strategy. He predicts that this initiative of open coordination, based on good practices and peer pressure, will not lead to more success than previous initiatives.[10]

In the framework of the Europe 2020 Strategy, a Belgian version of this strategy was set up: the so-called BE 2020. An agreement was reached by the federal, regional and community governments on the priorities that Belgium will put forward as its contribution to the European ambitions: a competitive industrial policy; an innovative digital society; climate, energy and mobility; employment and formation; social cohesion; and the fight against poverty.[11] A support committee of the Lisbon Strategy was set up for the monitoring and execution of these priorities in the framework of the Europe 2020 and BE 2020 strategies. More accurate objectives will be jointly defined by the different governments by the end of June 2010.

[1] De Morgen: Belgie bereid bij te dragen aan Europese lening Griekenland, 16 March 2010.

[2] The eurosceptic movements “No Euro for the Greeks” that appeared in several countries were denounced by all Belgian parties.

[3] Finance and Budget Committee, Federal Parliament, doc. CRABV 52 COM 794, 23 February 2010; De Standaard: De Gucht waarschuwt voor loze beloftes, 16 May 2010.

[4] Guy Verhostadt: Is de crisis rond de euro voorbij?, De Standaard, 9 April 2010; De Standaard: Verhofstadt wil dat Europese leiders stoppen met kakelen, 16 May 2010.

[5] Finance and Budget Committee: Parliamentary discussion on the law project allowing Belgium to make loans to Greece, doc. 52 2576/002, 5 May 2010; Plenary Session, doc. CRABV 52 PLEN 153, 5 May 2010.

[6] De Standaard: Leterme maant Merkel tot discretie over euro aan, 16 May 2010.

[7] De Morgen: Belgie bereid bij te dragen aan Europese lening Griekenland, 16 March 2010.

[8] Guy Verhostadt: Is de crisis rond de euro voorbij?, De Standaard, 9 April 2010.

[9] Committee on health, environment and social affairs: Les priorités de la présidence belge de l’Union européenne, report, doc. 52 2378/012.

[10] Guy Verhostadt: Is de crisi rond de euro voorbij?, De Standaard, 9 April 2010.

[11] Prime Minister office: BE2020 – Un agenda commun: de la crise à la croissance, press release, 19 March 2010.