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European Council outcome: Creating an EU of punishment and fear


02 Nov 2010


EU Priorities 2020
Social Europe & Jobs

The European Council of 28-29 October marks a new step in the Conservatives’ and Liberals’ austerity agenda for Europe, as unjustifiable sanction mechanisms are adopted.

The European Council approved today a strong set of new sanctions that targets countries facing difficulties. The package includes cuts on structural funds and quasi-automatic financial sanctions for member states infringing the Stability and Growth Pact (SGP).

“What are President Sarkozy and Chancellor Merkel trying to achieve?” reacted PES President Poul Nyrup Rasmussen. “If they were serious about the sustainability of public finances, they would create the conditions for jobs and growth. If they were serious about solidarity, they would find a way to lower the market pressure with Eurobonds. Instead, the right-wing majority of the European Council is creating a culture of punishment and fear.”

Poul Nyrup Rasmussen strongly criticized the outcome of the European Council; “Cuts and sanctions of this kind will never solve the crisis. What we need is growth- and jobs-enhancing policies. And an unemployment safety valve mechanism as a counterweight to the fiscal consolidation pressure cooker
The PES has made a proposal to boost the economy and create jobs while consolidating public finances, consisting notably of a tax on financial transactions, Eurobonds, and a smart and green investment plan.

The culture of punishment and fear is also visible in the proposal by Germany to suspend voting rights for countries infringing the SGP.  PES President said: “Europe was built on a logic of inclusion and solidarity. It is a disgrace to even consider changing the EU Treaty to disenfranchise nationally mandated politicians from countries facing difficulties”.

The European Council has also agreed to develop a permanent crisis mechanism to deal with sovereign default. The PES has promoted, from the beginning of the year, a permanent “European Mechanism for Financial Stability”, and it is a step forward that the European Council has now acknowledged the need for this. The mandate adopted by the European Council is, however, biased. The mechanism should deal not only with the crisis but also with debt-management in order to reduce the pressure hindering a quicker recovery.

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