Van Rompuy’s fiscal agenda: more Matti than Mutti?

Van Rompuy meeting with Britain's David Cameron at Downing Street on Monday

The less-watched parallel process to selecting the new head of the European Commission has been Herman Van Rompuy’s effort, backed by several member states, to come up with a work programme for the new commission president that will lock him in for the next five years when it comes to policy programmes and priorities.

Even though advocates of such an idea appear to be pushing the same policies that are mentioned in nearly every EU summit communiqué, several countries – including strange bedfellows like the Netherlands and Italy – have argued such an agenda is in some ways more important than the leader who takes over the commission in November. They insist it will enable Europe’s prime ministers to put their stamp on the next commission and its priorities after the European Parliament was seen to have dragged the current one around.

As a first step towards agreeing such a programme, Van Rompuy, the outgoing European Council president, on Monday circulated a four-page “strategic agenda” for the new commission, which he hopes to get agreed at this week’s high-stakes EU summit. We wrote about it here, but as usual for readers of Brussels Blog, we’re providing a bit more detail for those more interested, including a copy of the document, which we’ve posted here.

We’ve already highlighted Van Rompuy’s language advocating that the EU’s new leadership “show self-restraint” in promoting new policies, leaving what it can to national governments, which appears to be an effort to win over some of the more eurosceptic governments in London and The Hague.

But for those following the equally contentious debate over the future of the eurozone’s tough budget rules, there is also some language that appears aimed at those leaders, led by Italy’s Matteo Renzi and backed by France’s François Hollande, who are attempting to gain more flexibility in the EU’s fiscal rules, which were just revised during the height of the eurozone crisis.

For the uninitiated, there are several code words to look out for. “Flexibility” is the most important one, since it sends the message to the commission that it should interpret the rules as loosely as it can – something that Germany and Finland have argued against in recent months. The other word to watch for is “investment”. Both Paris and Rome have advocated counting government investment spending differently than other kinds of outlays, since investment implies the prospect of a future return. Defining what “investment” means, however, has provoked resistance from EU hardliners. Is education spending an “investment”? What about healthcare?

Van Rompuy’s document mentions the “built-in flexibility” of the existing rules, and has not a word about the need to watch deficits and debt as a future priority. When “consolidation efforts” are mentioned, they are referred to only in the past. Instead, nearly the entire section on future economic policy – entitled “A Union of jobs, growth and competitiveness” – is about “investment”. Nothing on public finances, other than a vague mention about continuing to make the eurozone more a “solid and resilient factor of stability and growth”. The key paragraph appears to be number three in the economic priorities:

Invest and prepare our economies for the future: by addressing overdue investment needs in transport, energy and research, skills and innovation; by mobilising to that end the right mix of private and public funding and facilitating long-term investments through the immediate mobilisation of existing financial instruments and the development of new fanatical capacities; by encouraging innovation and research.

It seems like a paragraph that could have been written in Rome rather than Berlin. Or as one EU official put it: “More Matti than Mutti”.