WRITTEN QUESTION E-2720/03 by Erik Meijer (GUE/NGL) to the Commission. Measures to safeguard EU plans for a dynamic knowledge society in 2010 from unintended negative effects of the Stability Pact.
Date: 2003-09-11
Institutions: European Parliament, Provisional data
Subjects: European Commission, budget deficit, education budget, power of initiative, public expenditure, research budget, sanction (EU), stability pact

C 65 E/200

Official Journal of the European Union

EN

13.3.2004

In the province of Antwerp EUR 277 099 has been granted for the Recreatief fietsroutenetwerk in the
Grande Nethe area (total project cost EUR 1 108 394) and in East Flanders EUR 20 834,11 for the
Schaarse Wegel cycle route project at Bassevelde (total project cost EUR 83 336,40).

It goes without saying that any cycle route projects that are subsequently presented and are in line with
the objectives of the programme measures will be part-financed from the ERDF at the rate specified in the
programme complement.

As far as the Walloon Region is concerned, the managing authority for the Meuse-Vesdre Programme
expects, for the entire programming period, to approve projects for the cycle route network costing a total
of EUR 13 218 470,38, of which the ERDF will pay EUR 6 654 735,19.

No cycle route network projects have been part-financed by the Structural Funds in the Brussels Capital
Region in 2002 or in 2003. Given the wording of the measures in the programme it is unlikely that any
are to be presented.

(2004/C 65 E/217)

WRITTEN QUESTION E-2720/03

by Erik Meijer (GUE/NGL) to the Commission

(11 September 2003)

Subject: Measures to safeguard EU plans for a dynamic knowledge society in 2010 from unintended

negative effects of the Stability Pact

1.
Is the Commission aware that the German newspaper Handelsblatt and subsequently the Netherlands
newspaper Staatscourant of 14 August 2003 report that Commissioner Diamantopoulou believes that the
European Growth and Stability Pact will in future pose a serious threat to education and scientific research
budgets in EU Member States as result of the 3 % ceiling on budget deficits, making it impossible to
achieve the target established in Lisbon in 2000 of making the EU the world’s most dynamic knowledge
economy by 2010?

2.
Is the Commission aware that Mrs Diamantopoulou is advocating that this serious problem should be
solved by no longer counting government investment in education and research for the purposes of the
ceilings established in the Stability Pact?

3.
Can the Commission confirm that a virtually insoluble situation is likely to arise now that Germany,
France, Italy and Portugal no longer appear to be able to keep to the 3 % ceiling in the longer term, new
Member States with a weak budget position are about to join the EU and the heavy fines that have to be
imposed on those who exceed the ceiling are in danger of exacerbating the situation?

4.
Does the Commission agree with Commissioner Diamantopoulou that no one seems to have the
courage to take the necessary steps to revise the 3 % rule which has become unworkable and that as a
result Member States are resorting to unilateral action to the detriment of the EU economy?

Is the Commission using its own right of initiative to break this deadlock or is it waiting for the

5.
Italian Presidency or subsequent presidencies of the Council to take action?

6.
How long does the Commission anticipate it will take before the urgently needed changes are
actually made to the Stability Pact, for instance by adopting the method proposed by Commissioner
Diamantopoulou?

13.3.2004

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Official Journal of the European Union

C 65 E/201

Answer given by Mr Solbes Mira on behalf of the Commission

(5 November 2003)

1.
The Commission believes that Member States should improve the quality of their spending in order
to fulfil their investment commitments in research and education within the framework of the Stability and
Growth Pact.

The Commission is aware of the Member of the Commission responsible for Employement and

2.
Social affairs’ personal views.

However, the Commission position is that not counting any specific type of expenditure for the purpose of
the ceilings established in the Pact would not be in line with existing regulations. Moreover, it would not
be justified on economic grounds since in any case all expenditures need to be financed. Leaving out of the
Union fiscal rules one or various expenditure items would lead to increased deficits thus putting at risk the
sustainability of public finances. All Member States face huge challenges resulting from ageing population
and thus ensuring the sustainability of public finances is crucial. Furthermore, any decision about possible
priority expenditure items would risk to be detrimental for other expenditure that may be contributing as
well to the Lisbon objectives.

3.
The deterioration in fiscal positions reflects to some extent the present weak economic situation.
Gross domestic product (GDP) growth has been more subdued than projected in spring and several
countries of the euro area have been in a technical recession. However, an important part of the slippage
also derives from past policy inaction or from deficit increasing measures. The situation in the three
Member States that are in the Excessive Deficit Procedure is of particular concern. The Council issued
recommendations under Article 104(7) to Germany, France and Portugal, setting deadlines for taking
corrective action and a deadline for the correction of the excessive deficit of 2003 for Portugal and 2004
for Germany and France. On the basis of the latest data on 2003 budgetary outcome and budgets for
2004, the Commission will have to assess the situation in Germany and Portugal. France had a deadline of
3 October 2003 to take effective corrective action according to the 104(7) Council recommendation. The
Council, on the basis of the Commission recommendation of 8 October 2003, now has to decide whether
France has complied with the recommendation under 104(7) Council recommendation. If the Council
establishes that there has been no effective action in response to its recommendations, it may decide to
give notice (Article 104(9)) to the Member State to take, within a specified time-limit, measures for the
deficit reduction which is judged necessary by the Council in order to remedy the situation. In such a case,
the Member State concerned to submit reports in order to examine the
the Council may request
If a Member State fails to comply with the Council
adjustment efforts of
recommendations given under 104(9), the Council may decide to impose sanctions (Article 104(11)). In
that case, the sanction will be a non-interest bearing deposit. The size of this deposit is defined in the
Council Regulation (EC) No 1467/97 (1), Article 12, on speeding up and clarifying the implementation of
the excessive deficit procedure. Such a deposit could not be considered in financial terms as a heavy
sanction, and it would only be converted into a fine after two years if the deficit has not been corrected.

that Member State.

As can be derived from the above, sanctions are not an immediate measure once a Member State
experiences a deficit above 3 % of GDP. The EC Treaty foresees an interaction between the Council and the
Member State concerned that gives quite a sufficient period of time to the Member State to correct the
deficit. The EC Treaty provides for an increasing peer pressure being exercised by the Council in order to
bring the deficit of the Member State concerned below the 3 % of GDP reference value.

With respect to the entrance of the new Member States to the Union, it should be noted that aggregate
figures tend to hide large differences in fiscal positions between individual countries. In 2001, the so-called
Pre-Accession Fiscal Surveillance Procedure was established in order to prepare the candidate countries for
the participation in the multilateral surveillance procedures currently in place within the Union. Most
accession countries plan to reduce their budget deficits within a medium term context: the Pre-accession
Economic Programmes foresee a reduction in the aggregate deficit for the accession countries from 3,8 %
of GDP in 2001 to 2,7 % of GDP in 2005. It is also worthwhile to mention that on average, acceding
countries have a lower debt level than current Member States, 36,9 % of GDP compared to 62,8 % of GDP
respectively in 2001.

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Official Journal of the European Union

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13.3.2004

The Commission considers that the budgetary goals and rule of the EC Treaty and the Stability and
4.
Growth Pact remain valid. A budget position of ‘close to balance or in surplus’ provides an appropriate
framework for prudent budgetary management that is in the economic self-interest of all countries.
The budgetary objective of ‘close to balance or in surplus’ provides ample room to allow the automatic
stabilisers to operate fully in response to economic downturns and to cope with the budgetary impact of
major reforms. It is also an appropriate medium and long-term goal, given high debt levels in many
countries, substantial contingent liabilities and because ageing populations will lead to large increase in
spending on pension and health. All these challenges can only be met if countries make sustained efforts
to run down public debt in the coming decade.

In addition, both the Commission and the Council agree that both public and private sector will have to
contribute if the Lisbon goals are to be achieved.
In the area of public finances, governments can
contribute by spending public money as efficiently as possible, by redirecting public expenditure towards
growth-enhancing cost-effective expenditure subject to overall budgetary constraints, and by seeking a
higher leverage of public support on private investment. Indeed, this is the reasoning behind guideline
No 14 of the Broad Economic Policy Guidelines adopted by the Council on 26 June 2003. This guideline
contains several ways in which the public sector should enhance its contribution to growth, one being ‘by
redirecting,
i.e. while respecting overall budgetary constraints, public expenditure towards growth-
enhancing cost-effective investment in physical and human capital and knowledge’ (2).

5.
The Commission has taken action to improve the Economic and Monetary Union (EMU) fiscal
framework in the light of the experience of the first four years of EMU. On 27 November 2002, it adopted
a Communication on strengthening the co-ordination of budgetary policies (3). This Communication
contains concrete proposals to better take into account the economic cycle when assessing budgetary
positions, to avoid pro-cyclical policies in good times, to ensure the sustainability of public finances, to
enhance the contribution of public finances to growth and employment, and to improve the enforcement
of the rules. The Ecofin Council broadly shared the view of the Commission and agreed with the
Commission that there was no need to change the current legal framework and that improvements could
be made to ensure an effective application of the rules. Both the Commission and the Council are now
implementing the agreed approach.

6.

The Commission refers the Honourable Member to the answers given above.

(1) Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the

excessive deficit procedure, OJ L 209, 2.8.1997.

(2) This message has been particularly stressed in the Commission Communication of 10 January 2003 on ‘Investing

efficiently in education and training: an imperative for Europe’.

(3) COM(2002) 668 final.

(2004/C 65 E/218)

WRITTEN QUESTION P-2728/03

by Ewa Hedkvist Petersen (PSE) to the Commission

(10 September 2003)

Subject: Norrbotten rail link

The presentation of the high-level group’s work on 30 June 2003 showed that none of the priority TEN-T
infrastructure projects include the most northerly parts of Sweden. The Norrbotten rail project is a missing
link and a cross-border project of significance for Member States Sweden and Finland as well as for third
countries Norway and Russia. Distances for transport in northern Europe are long and there are often no
alternative forms of transport or routes. Industry is therefore more vulnerable to disruption than in Central
Europe where alternative means of transport do exist.