A4-0073/96

Resolution on Economic and Monetary Union and economic and social cohesion

The European Parliament,

- having regard to the discussions at the public hearings held on this topic on 17 October and 29 November 1995 and 24 January 1996,

- having regard to the interim Commission report to the Madrid European Council on exchange rate relations between the Member States taking part in the third stage of Economic and Monetary Union and the remaining Member States,

- having regard to the working document drawn up by the European Parliament's DG IV on the social impact of Economic and Monetary Union,

- having regard to Rule 148 of its Rules of Procedure,

- having regard to the report of the Committee on Regional Policy and the opinions of the Committee on Economic and Monetary Affairs and Industrial Policy and the Committee on Research, Technological Development and Energy (A4-0073/96),

On the primacy of the objective of economic and social cohesion

1. Emphasizes that, pursuant to Articles 2 and 130a of the Treaty, economic and social cohesion is a fundamental objective of the European Union and that Economic and Monetary Union must be established taking into account the primacy of that objective;

2. Notes that despite the efforts made and the progress achieved regional disparities in the Union with regard to incomes, infrastructure and levels of employment are still very wide: by comparison with the 10 most prosperous regions of the Economic Union, the 10 poorest regions have an average per capita income which is three-and-a-half times lower and an unemployment rate which is six times higher (28% as against 4.5%);

3. Stresses that those figures confirm that the management of a market with no internal frontiers calls for a more ambitious common budget geared to existing conditions;

4. Acknowledges, however, that the disadvantaged regions will benefit just as much as the developed regions from the single currency: cuts in transaction costs, elimination of exchange rate risks, standardization of interest rates, growth and employment without inflation and without disruption caused by financial and currency market crises, economic development based on the full exploitation of monetary stability and the concomitant increase in the competitiveness of European undertakings;

5. Emphasizes that, by completing the internal market and improving the climate for investment and job creation in the European Union, economic and monetary union is intended to foster economic and social cohesion and eliminate the destructive effects on jobs of exchange-rate fluctuations and speculation; economic and social cohesion is essential in particular for the peripheral regions, as the risk premium will no longer apply to those regions and interest rates will fall, thus improving the climate for investment and potentially stimulating growth and employment; the operation of the internal market must not be jeopardized by any turmoil between participating and non- participating Member States in EMU;

6. Is convinced furthermore, that the nominal convergence criteria for the transition to the single currency, i.e. price stability and the reduction of public deficits, can create an environment conducive to more efficient Structural Fund measures;

7. Emphasizes that the long-term objectives of economic and social cohesion and EMU are not mutually exclusive. Only an economic policy based on lasting nominal and real convergence within an integrated economic and monetary area can maintain (or indeed strengthen) the Community's competitiveness vis-à- vis third countries and help overcome the structural weaknesses of the national economies. It must be recalled in this connection that nominal convergence is the basis for real convergence;

8. Fears, however, that a purely nominal understanding of convergence may widen the current disparities between the countries in EMU and those preparing to enter;

9. Does not exclude the possibility of the essential consolidation of public finances leading temporarily to tax increases and a reduction in public spending, which might in turn give rise to slower growth, an increase in unemployment and cutbacks in social spending; advocates, instead, that the Member States should employ a budget policy which avoids cuts in investment spending in disadvantaged regions and which leaves public spending on education and training and basic infrastructure unaffected, increasing it where possible;

10. Takes the view, therefore, that flanking measures must be taken if the twin objectives of Economic and Monetary Union and economic and social cohesion are not to prove mutually obstructive;

11. Reiterates that Community structural policy is an independent policy pursuing its own policy objectives beyond the objective of EMU;

12. Takes the view that trends leading in the long term to the emergence of a club of the elect, on the one hand, and a group of the excluded, on the other, would run counter to the very philosophy underpinning the European Union and would be both politically unacceptable and economically disastrous for the future of the Union;

On an integrated cohesion strategy

13. Emphasizes, therefore, in view of these risks, the need to draw up and implement an integrated cohesion strategy encompassing Economic and Monetary Union, regional policy and all relevant Community policies;

14. Takes the view, without wishing to call into question the nominal convergence criteria, that the procedures for the interpretation of the criteria set out in Article 104c of the Treaty and the connection with other indicators referred to in Article 109j should be clearly laid down forthwith; this clarification is all the more necessary because these guiding criteria are fundamental to the proper functioning of Economic and Monetary Union and must therefore be complied with beyond 1999;

15. Regards it as essential to create, for the countries preparing to join EMU, a stability area along the lines of the European Monetary System, which would be linked with the Euro area; a solidarity mechanism to protect financial markets against external speculation would have to be introduced embracing the countries which have joined EMU and those preparing to do so, should the latter meet their commitments under the convergence process;

16. Given the punitive nature of the conditionality clause in the application of the Cohesion Fund requests the Commission and the Member States to give positive encouragement to the cohesion states to meet the convergence criteria;

17. Considers it equally necessary to create a solidarity instrument ('stability fund') as an extension of the Cohesion Fund for the pre-in-countries if they fulfil their obligations in the convergence process;

18. Calls on the Intergovernmental Conference to define economic and social cohesion as a component part of the 'acquis communautaire' and therefore as a compulsory objective for the countries that make up the Union at present and those wishing to join it;

19. Requests that the Council reconsider establishing a European Investment fund, including the possibility of low interest loans to support Member States' efforts to meet EMU convergence criteria while reaffirming economic and social cohesion;

20. Believes that the Intergovernmental Conference should consider strengthening the economic policy instruments in the Union, since under the current provisions of the Treaty economic policy coordination is inadequate and incomplete, and the completion of economic and monetary union within a few years of 1999, meaning the participation of all the Union's Member States, presupposes a European economic policy based on close cooperation and capable of giving growth and employment a fresh boost;

21. Calls on the Commission, with a view to the first three-year report on the state of cohesion, which it is required to submit in the near future,

- to define the concept of economic and social cohesion more clearly,

- to consider using less artificial and restrictive cohesion indicators than at present (not only per capita GDP but also the employment rate, the unemployment rate, sustainable growth, changes in economic trends, action to prevent exclusion and the state of infrastructure, including social and cultural infrastructure),

- to draw up a timetable for the implementation of the most important measures for a long-term cohesion strategy and to specify the desired results,

- to provide for systematic and regular monitoring of the development of cohesion and for appropriate reporting to Parliament;

22. Calls on the Council in close cooperation with the Commission to establish parallel reports to those of the EMI on the cohesion effects of EMU;

23. Takes the view, therefore, that the Intergovernmental Conference should reformulate and consolidate Title XIV of the Treaty, Economic and social cohesion, so that this sphere becomes a separate policy rather than an adjunct to the economic and monetary policy;

24. Takes the view that the regional policy must be the key area of this long- term cohesion strategy; notes that, although the contribution made by the Structural Funds accounts for a substantial proportion of the GDP of the leading recipient countries (about 3% of Portugal's, Greece's and Ireland's GDP and 1.5% of Spain's), the catching-up process is still too slow; concludes from this that a qualitative and quantitative reform of the EU budget must be undertaken with a view to increasing the endowment of the Structural Funds under the 1999 review of the Financial Perspective;

25. Takes the view that the Union's future enlargement to include the CEEC, Malta and Cyprus will appreciably change the concept and dimension of the regional policy, but considers that this must not have an adverse affect on those regions which require the Structural and Cohesion Funds, in order fully to attain the objectives of economic and social cohesion;

26. Believes that, in view of these challenges, an extension of the Structural Funds that is based on the above indicators is more selective and accords more closely with the principles of concentration, additionality, planning and partnership should be formulated;

27. Also takes the view that this new administration of the funds entails closer coordination among the Member States, the regions, the municipalities and the two sides of industry and insists on the more effective delivery of structural funds to maximise their impact;

28. Takes the view that, with a view to making regional measures more coherent and more efficient, priority must progressively be given to dialogue between regional and/or local agencies and European institutions, this being the only way to achieve better understanding and better action to cope with the cross-frontier regional problems and the problems of the large regional cooperation zones;

29. Calls on the Intergovernmental Conference specifically to recognize in the Treaty the special situation of, and problems facing, the island regions, the outermost regions, and the Arctic and sub-Arctic regions of the European Union and the need to implement suitable policies and measures to help them overcome their isolation;

30. Notes that the regions currently face numerous challenges, since they are having to adjust to the new technologies rapidly, to equip themselves, for example, with high-speed transport and telecommunications networks and to derive optimum benefit from the information society and its implications for the choice of locations for economic activities;

31. Takes the view, therefore, that only if a European regional planning policy is introduced can the requirements of a long-term cohesion strategy be satisfied; consequently, calls on the Intergovernmental Conference explicitly to acknowledge this concept in the future Treaty and to define the substance and instruments;

32. Takes the view that the success of determined action by the European Union to increase employment, the need for which was reaffirmed at the last meeting of the European Council in Madrid, presupposes a regional concept for the promotion of all local initiatives relating to education, vocational training, the organization of working time and the promotion of SMEs on the basis of the European strategy for the promotion of local development and employment initiatives drawn up by the Commission;

33. Calls on the Intergovernmental Conference to devote a separate title in the Treaty to measures to combat unemployment in view of its social and regional costs;

34. Considers it necessary for the Intergovernmental Conference to take all necessary measures in this context to prevent the spread of social dumping and its implications with regard to the relocation of economic activities by strengthening the social provisions of the Treaty and requiring all the Member States to subscribe to the social protocol;

35. Takes the view that, as an active, sustainable environmental protection policy has a major contribution to make to the quality of life in the regions and their attractiveness (rehabilitation of former industrial areas, facilities for urban areas, etc.) and can create jobs, the environmental dimension is an essential element of cohesion and vital if Europe is to be a decent place for future generations to live in;

36. Underlines the need to press ahead more actively with the work on the creation of large trans-European transport, telecommunications and energy networks, as referred to in the White Paper on growth, competitiveness and employment, than is currently the case and for more attention to be paid to their consequences on the environment and local and regional economic structures; emphasizes that secondary networks must also be created to prevent the further concentration of human activities in conurbations and to prevent remote and rural areas from becoming isolated;

37. Takes the view that a consistent European industrial policy might have a favourable influence on the economic development and specialization of the less developed regions; notes, on the other hand, that the European industrial policy is currently left to the large enterprises and multinational companies, whose locational decisions and concentration measures may be highly detrimental to the development of the regions;

38. Calls on the Intergovernmental Conference, therefore, to amend the chapter of the Treaty on industrial policy, which is currently still too fragmentary, so that there may at last be a genuine European industrial policy capable in particular of contributing to the consolidation of economic and social cohesion;

39. Is concerned about the current threats to the future of public services in the Union posed by deregulation; emphasizes the outstanding role of the public services in maintaining a high level of economic and social cohesion (equal treatment of users, public service tasks) and calls on the Intergovernmental Conference explicitly to acknowledge in the Treaty the irreplaceable function of the public services and the need for them to be retained;

40. Instructs its President to forward this resolution to the Council, the Intergovernmental Conference, the Commission and the governments and parliaments of the Member States.