(Reports of the plenary session of June 1991 in Strasbourg)

Wednesday, 12 June - Addressing questions to the Council and Commission on the progress of discussions within the Intergovernmental Conference on EMU, Fernand Herman (B, EPP) concluded that the Council had hijacked the whole proposal with its narrow, nationalistic and anti-democratic approach which left Parliament out in the cold. He accused France in particular of ignoring the wishes of both Parliament and Commission and he regretted that the original timetable set down by the Rome summit had been watered down with the second phase now apparently delayed until 1996.

Replying as President-in-Office of the Council, Jacques Poos spoke of proposals (another non-paper) which were to be submitted to the Intergov-ernmental Conference today on the way forward for EMU. He emphasised that this document could not reflect the positions of all the member states and he added that the delegation of one country, without mentioning a name, had made it clear that it would not accept a single monetary policy and a single currency being imposed on them. He talked of the use of the ECU as a single currency during the transitional phase to EMU, but he added that the British and Spanish proposals on the use of the ECU deserved particular attention.

The transitional phase would also involve further moves towards economic and monetary convergence in the EC and here he said that the Presidency proposals were broadlyy supported by all the member states. Regional problems would continue to be addressed through the various EC funds, he added.

On the question of Parliament's involvement, he admitted that Parliament's role in the institutional structure of EMU had not been determined in any definitive way as there were different views within the Council. The proposed European Central Bank, which Belgium had suggested should be called a European Monetary Institute, would have the job of managing the ECU during the transitional phase, he said.

Commission President Jacques Delors told the House that although the UK had maintained a general reservation about the eventual goal of EMU throughout the discussions, he did feel that his proposal to allow countries to opt in at a later date was welcomed. He was still optimistic about reaching an agreement although he believed the onus of defining the general thrust of policy should rest with the European Council. But, he did point out that as far as he was concerned, economic and monetary union was not just about monetary and budgetary policy but embraced a whole series of policy areas covering markets, prices, competition policy, labour and training. Another controversial issue was the question of budget deficits and what kind of sanctions or constraints would be imposed on national governments. This was a worry for some countries, he admitted.

Social and economic cohesion or the degree of help to be given to the poorer regions was another area where

there were differences of opinion but here the Commission President took the view that it was just not feasible to consider the idea of a 'compensation' fund in which richer member states would transfer large sums to the poorer states as the Community was not a true Federal State in the sense of the United States or Germany. Moreover, he added, the size of the regional and social fund as it affected countries such as Portugal and Spain was now larger than such regional transfers found in a Federal system.

The Commission President then surprised MEPs by telling the House that some countries still opposed the wider use of the ECU. This hardly seemed compat-ible with subscribing to the overall aim of monetary union.

On the question of institutional structures and decision-making procedures, he emphasised his belief that the same philosophy as a basis for political control that applied to political union should apply to monetary union. But the independence of the new Central Bank should be guaranteed although this did not mean that it should be given total discretion to act.

The European Council should be responsible for deciding policy and democratic control ensured through the European Parliament. This, he explained, would come through the legislative procedure, as if for example, sanctions were to be imposed on a member state, then this would have to be in the form of a legislative proposal that would be

debated on the floor of the House. Just what degree of influence MEPs would have over the contents of the legislation would depend on reforms to decision making procedures being considered at the IGC on political union. It was this point or the lack of a role for Parliament that worried many speakers in the debate that followed.

The alternative scenario with policy being run on an inter-governmental basis could, he predicted, lead to yet more government by committee as decision-making would pass directly to an economic and financial committee reporting directly to the Council of Ministers.

Mr Delors then said that he was in favour of a short phase for stage two which is due to start on 1 January 1994 after the completion of the internal market.

This would herald the creation of the new European Central Bank which should be up and running as soon as possible if it was to gain credibility with the financial markets. As to a date - by 1997. He did nevertheless, emphasise that this would not mean a 'two-speed' Europe if the governments concerned were committed to the goal in the end.

He admitted that there was still a need to settle the question of convergence or price stability and fusing national economic policy making, but here again it was unlikely that a perfect harmony could be achieved. What was important was trends showing economies coming into line and the Commission itself had in fact prepared specific programmes designed to bring this about. More convergence meant more jobs, overall growth and price stability, he said.

But for Alman Metten (N, Soc) the crucial question was that of democratic control and what he saw as an absence of a role for both the national Parliam-ents and the European Parliament. As he put it, Parliament's demands for co--decision-making were vital and not negotiable. As it was, proposals under consideration at the IGC would leave decision-making in Council's hands and, he added, the new European Bank, created by an annex to the Treaty that could not be amended by any Parliament, would even be more independent than the Bundesbank. At the very least, the Governor should report to one of Parliament's committees as happens in the USA.

Bouke Beumer (N, EPP) too, was worried about the absence of democratic control. Proposals for just consultation with the European Parliament did not go far enough, he said. At the very least decision-making should be through a cooperation procedure which would allow Parliament to reject Council's guidelines.

Pat Cox (Munster, LDR), standing aside from the technical details, reminded the House what was at stake. It was, he said, 'a glittering prize' in the form of lower interest rates, reduced costs for business, a better deal for consumers and more prosperity for the regions. He too, favoured a swift transitional period for setting up the new Bank, although there were, he said, problems to be addressed especiallyy with the economies of Italy, the United Kingdom, Greece and Portugal.

Other issues that needed to be settled included the role of the national Banks, especially with regard to the degree of liquidity that would have to be maintained in the new situation.

Mr Cox also drew attention to the budgetary pressures facing smaller countries such as Greece and Ireland where, he said, it was becoming more and more difficult to find matching national finance for EC projects. Could the Commission envisage a new form of help, he asked?

Ben Patterson (Kent West, ED) repeated the concern of others that Parliament had been excluded from the decision-making process. Another danger, he said, was the prospect of a 'two-speed' monetary Europe, a kind of 'monetary Schengen', taking place outside the framework of the Community. He felt that only the British or the Spanish proposals for the development of the ECU would be as good as the Deutschmark but, in reply, Vice-President Henning Christophersen restated the Commission's objections to parallel currencies and the danger of monetary speculation inherent in the Spanish proposal.

Other speakers, including Brigitte Ernst de la Graette (B, Greens), Roberto Speciale (I, EUL), Pierre Lataillade (F, EDA) and Joaquim Miranda da Silva (P, LU) felt that regional imbalances were being neglected. But, Ian Paisley (Northern Ireland, Ind) feared the loss of national sover-eignty if monetary powers were handed over to a Eurropean Central Bank.

For the Commission, Mr Christophersen was encouraged by the fact that Italy, Portugal and Spain had brought forward plans to realise convergence and he hoped others would follow suit. On the reduction of regional imbalances, he felt EMU would make a major contribution and he promised a full review of the operation of structural funds before the IGC completes its work.

John Stevens (Thames Valley, ED) took a more relaxed view than others. He felt EMU would happen because that was what the consumers and businessmen wanted and he added that the markets required minimum political interference. EMU would be a major contributor to convergence and not a consequence of it, he believed, and he urged MEPs not to be unduly worried because Parliament would realise its ambitions once people have 'Europe in their pockets', in other words a single currency, as he put it.

For Paddy Lalor (Leinster, EDA), EMU would not be feasible until there was a clear commitment to economic and social cohesion, with a guarantee of help for the less-developed regions. If progress here was unsatisfactory, he called for appropriate remedial measures to ensure that the peripheral regions, like Ireland, and not fall further behind.

Alan Donnelly (Tyne and Wear, Soc) was also greatly concerned about the regions and he called for a definite commitment in the revised Treaty to economic and social cohesion. He also told Mr Delors that the British people did not want to be relegated to the 'second class carriage' as far as EMU was concerned.

The regional problem was also taken up by John Cushnahan (Munster, EPP) who felt that Spain, Greece, Portugal and Ireland should block a revised Treaty unless and until the issue of economic and social cohesion was resolved. In his view a 50% increase in EC regional and social funds was no more than a token gesture, amounting only to 0.5% of the Community's GDP. The only answer, he believed, was budgetary transfers from the richer to poorer regions.

Panayotis Roumeliotis (Gr, Soc) drew attention to the enormous budgetary problems faced by Greece. The Community's budget would have to be increased considerably if it was to provide effective assistance, he said, although in reply Commissioner Henning Christophersen said Greece was already benefit-ing to the tune of 5% of its GDP from the Community while Ireland was receiving as much as 9%.

The Commission could not compensate for the lack of political will in the countries concerned or the failure to take advantage of new opportunities under the single market programme, he added.