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Reinfeldt slams EU plan to vet national budgets

TT/The Local · 12 May 2010, 16:11

Published: 12 May 2010 16:11 GMT+02:00

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The proposals, put forward on Tuesday by economic and monetary affairs commissioner Olli Rehn, would apply to all EU countries, including those like Sweden that have not adopted the euro and also including countries that had a record of well-managed public finances.

“We think it’s odd that it would apply to all countries. The presumption should be that those countries whose budgets break the Stability and Growth Pact - you could possibly have a discussion on that point,” Reinfeldt said.

“I will object to this way of looking at things,” he added.

The European Commission plans to create a permanent crisis mechanism to head off future collapses like that seen in Greece, and to further coordinate economic policy.

Among the commission’s suggestions is that member states coordinate at the EU level when preparing economic policy and reform programmes, possibly submitting budgets to the European Commission before putting them to national parliaments. Greater European coordination would help member states cope with common challenges, according to the commission.

"Coordination of fiscal policy has to be conducted in advance, in order to ensure that national budgets are consistent with the European dimension, that they don't put at risk the stability of the other member states,” Rehn said.

The commission has also proposed a permanent mechanism to help member states struggling to order their public finances. The enormous temporary bailout package for Greece, plus a further package agreed to help countries that hit trouble in the future, will need to be supplemented with such a mechanism, the commission says.

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The proposals also include changes to strengthen the Stability and Growth Pact, and measures to force countries to follow the rules. More emphasis will be placed on states’ indebtedness and on competitiveness. Countries that repeatedly break the rules of the pact could find themselves losing out on EU money for infrastructure and development projects.

TT/The Local (news@thelocal.se)

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Your comments about this article

19:37 May 12, 2010 by zircon
Etcetera, etcetera, etcetera...
21:05 May 12, 2010 by Beavis
Well if bag woman and her cronies get in Sweden will need this!
22:39 May 12, 2010 by Jan M
Strange response. What's he worrying about?
23:01 May 12, 2010 by ringorm
One Nation, One Leader, One EU.

Duck EU!
23:58 May 12, 2010 by krrodman
The problem with the EU is that it is a monetary union, but not a political union. In theory each country is free to set its own social policy so long as it adheres to the EU's monetary policies. While it all sounds good, in the real world it is unworkable. The PIIGS have spent well beyond their means, and lack the political will to be fiscally responsible. The ECB will now pay the bills for the fiscally irresponsible. The moral hazard of supporting the irresponsible countries is apparent to all.

There are only two possible alternative futures for the EU. The easiest path is dissolution. And who would be surprised? If I were German I would not want to pay for the wasteful irresponsible Greeks. The second alternative is that the EU evolves into a stronger political union in which the central government dictates social policy to every country.

The European Commission's plan to review government budget proposals is the first step to forming a stronger central government with increased powers. In effect the European Commission will be empowered to make budget decisions for each member country. The implications are obvious: the European Commission will be empowered to force countries to change social programs in order to meet budget goals. I hope that Swedes are ready to have a German bureaucrat dictate its social welfare programs.
09:08 May 13, 2010 by Nemesis
@ krrodman

A german bureaucrat looking at spending in Ireland, Spain, Greece, Italy, Romania, Bulgaria, Portugal and Malta would be a good thing.

Those countries would have to explain to a bureaucrat who does not have any comprehension of a sense of humour as to why they are paying money to pet religeous projects and had entire civil service departments that are over staffed, inefficient, not engaging in long term planning and used as a place to give jobs to idiots who could not survive in the real world.
10:57 May 13, 2010 by calebian22
Corruption and reckless political spending will never be stamped out by adding another layer of bureacracy. However, the one advantage of this idea will be that there will be more of a paper trail to follow when financial scandals hit. Those responsible will have less defensible positions because submitted budgets will be on record to compare with what has actually been done.

The idea that there needs to be approval of the budgets before one can be implemented is ridiculous though. Oversight yes, meddling no. Good for Reinfeldt.
12:07 May 13, 2010 by krrodman

I agree with you, except that the only way this plan would work is for all budgets to be examined in advance of their implementation so that no country could run a large deficit.

The real point that I was trying to make is that once the monetarists are empowered, they will control social policy.

Let me give you an example of what I mean:

Let's say, for example, Sweden decides next year to reduce work hours to 32 hours per week. The government of Sweden will proclaim that it will be a great step forward for the average worker, and through magic they will also proclaim that it is budget neutral(they will say that increased efficiencies will offset the shorter work week). All of the workers in Sweden will rejoice.

The Swedish government may, or may not, be correct in their budget projections but they will not be the ones to decide the fate of the program. A German bureaucrat from Bonn will examine the projections, and on behalf of the EU decide if Sweden will be allowed to implement the program. If the bureaucrat determines that the program busts the budget, the program will have to be scrapped.

On basic principles, Sweden should reject this proposal.
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