Back in the EU-SSR: Imminent power centralization within the EU

05-13-2010 • ZeroHedge.com

The eurozone countries will lose sovereignty over the preparation of their budgets, if approved a European Commission proposal which aims to strengthen economic cooperation in the EU. Brussels wants to create a mechanism for warning of macroeconomic imbalances and to align the budgetary policies of member states with the political objectives of the Union The Commission's proposal is only the first step (be prepared for another long run) to combat the crisis of the euro. If the European Council in June, to support this plan, will be institutionalized mechanism to stabilize the financial approved a week ago and the budgets for 2012 are already built (over 2011) in accordance with these rules. Brussels will have more powers in the supervision of macro-economic objectives. The idea is to anticipate the presentation of the Stability and Growth Programme, under what the report calls "half European." Each PEC is analyzed more rigorously than hitherto. Only when approved or modified this program is that the country draws up the budget. Eurostat will also gain powers to audit the accounts of each country. The excessive deficit procedures will be faster than the current document and prompts the need to prepare secondary legislation. And here comes one of the crucial points of the proposal will not only alert to the budget deficit, but also for the public debt. For example, if a country has more than 60% of GDP in debt, will not suffice to meet the 3% deficit, but this "has to be consistent with the continued and substantial decline in public debt." Basically, the increased coordination takes into account more indicators and the debt is emphasized, as was the case at the beginning of the Stability and Growth Pact governing the euro zone. Nonetheless, the Commission only has powers to notice and recommendation. In the case of risk analysis for a poor country or denial of a stability program, sanctions shall be paid by the European Council, under rules not very clear in the document. "In case of obvious mismatches in budget plans for next year, will recommend a review of the plans," reads the proposal. "The Eurogroup will have a crucial role in the new system of enhanced coordination and, where appropriate, may seek a formal decision in accordance with the Treaty of Lisbon." These powers are not very evident, and may be limited community funds or bonds, but the Council shall take decisions by qualified majority and has the means to compel a small country to amend its budget in this case be denied the services of committee. In practice, the plan is tantamount to creating an embryonic European economic government, an idea that some countries have advocated since the single currency, but that never materialized due to opposition from a group of states led by Germany. The crisis of the euro has eliminated this opposition.

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