Mr President, we very much welcome the political debate that is beginning on the Stability Pact. Mr Prodi gave the word and it was re-launched by the Ecofin Council. The Commission is very wrong to put adherence to the rules side by side with political judgment. The law is flexible when the realities so require and it is then the duty of politicians to interpret it. This Pact, which is currently being tested by the realities, signed in 1997, at which time, the Commission, the Central Bank and many states heralded an era of sustainable growth. Having first denied that there was a recession, they then declared that it would be brief and that the economy would soon recover. Those who were so wrong should not dole out lessons. Today, the improvement in the situation is fragile. It must not be compromised, particularly as we are at risk from the fall in the dollar and serious American imbalances. Some governments make a show of virtue in contrast to the large states that are deemed to be guilty. However, the behaviour of these critics often appears to be opportunistic. In fact, on many occasions their inflation rates are above the average – which reduces their debts – they play at fiscal dumping in order to attract capital and they forget about the Structural Funds, of which some of them are major beneficiaries. There are therefore several good reasons for flexibility in the Pact. It does not take account of the cycle, it maintains divisions, it seeks to impose penalties without offering encouragement, and it is incapable of responding to the nagging problem of the very poor potential for growth in Europe. As a result, it would not be an exaggeration if the Commission were still to be portrayed as the guardian of procedures. We need a political actor in Brussels. There is no such thing as a European economic policy and we want to create one. This is a matter of urgency. The Pact is not dead, as proved by the commitments made by France and Germany for 2005. However, if the economic recovery were not confirmed or were poor, it would be extremely difficult to fulfil these commitments. I say again: the reform is essential. To this end, the method is as important as the substance. All of the quarrels among institutions and among states highlight a blatant lack of democratic capacity and legitimacy. The assessment by peers of the discipline and quality of the national budgetary policy is undoubtedly necessary, but it is not enough, as was mentioned previously. Solidarity and greater participation are required to build an economic policy. In this respect, I believe that the interactive dialogue between the national parliaments and the European Parliament, as well as the consultation of civil societies, are vital elements. As far as content is concerned, we need both rules and acts. We do not reject the principle of a pact for rules that seek to combine stability and growth. However, we have strict ideas as regards the substance. We need rules that encourage timely action and improve the quality of expenditure and revenue. How can we claim to legitimise a budget discipline when the Union shamelessly cultivates fiscal competitiveness? France and Germany are right to call for the tax harmonisation that a number of other states refuse to allow them. These rules must guarantee too the capacity to finance projects considered to be in the general interest. We also need acts. There will be no successful reform of the Pact if we do not build, as a complement, a European budgetary policy, with a genuine budget to help finance the objectives of sustainable development and cohesion agreed at the Lisbon and Gothenburg summits. Is it not unfair to prevent at least the countries in the euro zone from having a joint capacity for budgetary action when they share a single monetary policy, but are deprived of a second major economic policy lever? Unfortunately, there is the risk that the IGC may not open these doors and that the reform of the Pact may be too limited. You can therefore expect an increase in tensions, to which our debates today are only a prelude. (Applause)

Political group: GUE-NGL