Poland Joins Fiscal Pact
February 23, 2012
Poland’s ruling coalition and most of the country’s Eurodeputies have hailed the government’s decision to join the new European fiscal treaty on tighter budget discipline as a step in the right direction. But the opposition has attacked what it described a step that undermines Poland’s sovereignty.
The so-called fiscal compact is due to be signed in March by 25 of the 27 EU member states. Britain and the Czech Republic have refused to sign up. The pact—formally called the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union—is scheduled to come into force on Jan. 1, 2013 on condition that at least 12 of the 17 eurozone countries ratify it by that time.
Agreed at a EU summit on Jan. 30, the fiscal compact’s golden rule is that a country’s annual structural deficit must not exceed 0.5 percent of its nominal GDP. Non-complying countries will be fined by the European Court of Justice, with a penalty equivalent to up to 0.1 percent of the country’s GDP.
The leaders of 25 countries, including Poland, agreed at the Brussels summit to sign a fiscal treaty with the new expenditure rule. A compromise was reached over who can attend eurozone summits, the issue most disputed by France and Poland. It was decided that non-eurozone countries that ratify the treaty will be allowed to take part in summits of the 17 eurozone members focusing on competitiveness and changes to the eurozone and, if needed, on the treaty’s implementation at least once a year.
“The main assumptions of the fiscal treaty indicate that Poland is at the core of the European Union,” said Jerzy Buzek, former president of the European Parliament. He said the outcome of the summit was good for Poland and several other non-eurozone members. “We wanted very much to have the eurozone repaired, so as to help Greece and possibly other countries... although we are not taking part directly in this assistance and we are not incurring financial burdens,” Buzek said. “Today, Poland is fully taking part in all preparations for a new eurozone, its restructuring, as well as action designed to prevent crises from recurring in the future. This is extremely important,” added Buzek, who was Polish prime minister 1997-2001.
Danuta Hübner, head of the European Parliament’s committee for regional development, said that at the summit Poland managed to reverse a trend towards replacing European integration with eurozone integration.
She said the provision that competitiveness problems will be discussed at summits attended by all signatories of the treaty is of key importance.
“Over the last months, the eurozone had been virtually turning into a symbol of European integration. Thanks to Poland and its efforts to ensure the presence of countries which want to join the eurozone in the decision-making process, European integration was not replaced with integration within the eurozone,” Hübner said.
“The choice of whether or not to sign a imperfect fiscal treaty was tantamount to a strategic choice between taking or not taking part in Europe’s decision-making process,” said Janusz Lewandowski, the EU commissioner for financial programming and the budget. In his view, the significance of the EU summit goes well beyond the content of the fiscal treaty adopted by the 25 leaders. “This is a decision with long-term consequences for the future of the EU. And the rationale of signing it and of the pact itself should be assessed from a strategic perspective rather than in terms of its economic meaning,” Lewandowski said. “The content of the pact is imperfect and unsatisfactory. But Poland and other signatories of the treaty will be taking part in all meetings about issues reaching beyond eurozone problems,” he added, stressing that Poland will take part in the decision-making process and will have an influence on important issues, for example finances.
“Joining the fiscal pact, Poland, as a non-eurozone country, is not obliged to and will not submit itself to the sanctions resulting from the pact’s provisions on financial penalties for excessive deficit,” Mikołaj Dowgielewicz, Poland’s minister for European affairs, said after the summit. “These rules apply to eurozone countries. No country outside the eurozone is obliged to comply.” Dowgielewicz added that, by joining the treaty, Poland was not transferring its national powers to the EU.
But opposition politicians disagree. Jarosław Kaczyński, leader of Poland’s largest opposition party, Law and Justice (PiS), said that the decision to join the treaty undermines Poland’s sovereignty and increases its dependence on the EU’s big players, especially France and Germany. Kaczyński praised Britain and the Czech Republic for their “courage and far-sightedness” in refusing to sign up.
Jacek Kurski, an EU deputy from the conservative Solidarna Polska party, criticized the government for joining the fiscal treaty. “This is a desperate failure—6.5 billion euros in Polish currency reserves is on the menu while Poland is under the table instead of being at the table,” he said, adding that “all sides for whom Poland’s interests come first should work together to stop Donald Tusk’s policy, which is disastrous and damages Poland’s position on the international arena.”
Ludwik Dorn, former speaker of the lower house of the Polish parliament who is now a member of Solidarna Polska, said Poland’s European policy was in tatters because by joining the fiscal treaty, Prime Minister Donald Tusk’s government had given its consent to a new distribution of power in the EU, one which has an adverse impact on the 2014-2020 budget since it shifts decision-making powers to eurozone countries.