The European principle “one for all, all for one” has crashed and burned. Twenty-five from the total of twenty-seven EU members declared readiness to sign up the financial stability pact in March this year. The UK and the Czech Republic have refused to comply with all clauses of the new treaty regarding financial discipline. This development has confirmed the fears of analysts about the emergence of a two-gear Europe. French President Nicolas Sarkozy hastily refuted such predictions by saying that “this meant no different gears but various degrees of European integration and everybody was free to choose.”
What does the fiscal compact imply?
The treaty is aimed at stabilizing the financial market of the 17 eurozone countries. It sets a rigid deficit ceiling coupled with a range of punitive measures for failure to observe it. In this way Europe tries to persuade investors that blunders having caused the EU debt crisis, will never occur again. A permanent fund worth EUR 500 B will be set up to act as the basis of financial stability.
What are Bulgaria’s demands?
Bulgaria and the rest of the countries that are still outside the euro, were not given the status of observers at eurozone meetings as they demanded. During the summit in Brussels four countries pressed for the right of members planning to adopt the euro to join official eurozone meetings. The Vishegrad Four asked for amendments to the treaty as a condition for signature of the compact. Bulgaria too, insists on attending these meetings. “Maybe the biggest compromise that participants were looking for, was about the attendance of the non-eurozone countries in the meetings of the 17 eurozone members”, said Bulgarian PM Boyko Borissov. “Well, this is where the main discrepancy lies: the eurozone countries want to hold meetings for discussion of their budgets and economic policies on their own.” The PM specified that there has been some progress in the demands given that the leaders have agreed on eurozone meetings taking place after EU Council meetings. In this way, whenever important financial and economic problems are discussed, Bulgaria will be present at the decision-making. “We have succeeded in reaching this sensible compromise and we will take part in such meetings whenever they discuss issues pertaining to Bulgaria”, PM Borissov commented.
The treaty contains an appeal for speeding up coordination of tax policies. This is a most tricky issue for many EU countries. Bulgaria absolutely opposes this clause in the treaty and the Bulgarian government has repeatedly stated this position. According to PM Borissov this text obliges Bulgaria to increase the tax rate and this country will not concede to such a measure. “The aim of the proposal is an exchange of experience and combating tax fraud”, Borissov commented Brussels’ demand, because tax rates vary across Europe that this situation favors tax crime. “And EU countries should consolidate in the fight against fraud”, he specified. He made clear that in case tax rates are equalized, Bulgaria would move and refuse to sign the fiscal compact in March based on a negative vote of the Bulgarian parliament.
Translated by Daniela Konstantinova
