The Fiscal Compact Treaty – An Idiot’s Guide

TREATY ON STABILITY, COORDINATION AND GOVERNANCE IN THE ECONOMIC AND MONETARY UNION

or

How I learned to Stop Worrying and Love the Fiscal Compact

Preamble:

All countries using the Euro should work together to improve their collective economies and balance their budgets. To do this, we’d like them all to agree that if they don’t, we can fine them.

Title I: Purpose and Scope

Article 1

  1. Let’s have some rules to keep you from spending too much or borrowing too much.
  2. Especially if you’re using the Euro.

Title II: Consistency and Relationship with EU laws

Article 2

  1. This will be LAW.
  2. Unless it contradicts the law…

Title III: Fiscal Compact

Article 3, or, what the hell is ‘fiscal compact’?

  1. Do this stuff

(a)    Balance your budget, or have more than you need.

(b)   Or at least be trying to.

(c)    Or not at all if you have a note from your Mum.

(d)   If you’re really screwed we’ll give you a little leeway about what ‘trying to’ (point b) is.

(e)   If you mess it up, we’ll come for you.

  1. You have to make this law in your country.
  2. The stuff we’ve said like ‘structural whachamacallit’ and fiscal compact, we’ll explain it, hang on while we grab a thesaurus.

(a)    Structural budget thing – that’s all the money the government makes, minus what it spends, pretty much. Oh and minus money from temporary money-making schemes.

(b)   Exceptional circumstances – if a volcano erupts or something, you can probably ignore the whole treaty and start rebuilding your shattered lives. For a few weeks.

Article 4

  1. If your debt is too high, sort it out. If you don’t we’ll have a meeting to decide if your debt is too high.

Article 5

  1. Homework: If you sign the treaty we expect a written report on how you’ll sort out your finances. On our desks by 2013 and no less than 1,500 words.
  2. We’ll be watching you on this. Like Hawks.

Article 6

  1. Tell us if you’ll be giving out government bonds. We need to know, but we’re not going to check ourselves. We’re busy.

Article 7

  1. All countries using the Euro agree to agree to what we want to do if a country doesn’t do what they agreed to in the treaty. If a majority of countries disagrees though, we won’t do it.

Article 8

  1. Tell us what you’re going to do. Do it. If not, off to court with you to get fined.
  2. If you think another country isn’t doing what it’s supposed to, rat it out and we’ll make it pay us all money.
  3. This is a ‘special’ agreement. Our Mums said so.

Rocky IV: Economic Policy Coordination and Convergence

Article 9

  1. All countries in the Eurozone will work together, hold hands and dance beneath rainbows while singing ‘I’d like to teach the world to sing’.

Article 10

  1. Use the Eurozone treaties we already have as well, unless it screws up your economy or whatever.

Article 11

  1. Ask other countries’ permission before you change any economic policies.

Title V: Governance of the Euro Area

Article 12

  1. Enda Kenny, other heads of state, some EU guys and the head of the European Bank have to have meetings. They’ll also appoint a president of the ‘Euro Summit’ (PES)
  2. They have to do this at least twice a year to sort their financial plans out.
  3. Countries not in the Eurozone are not invited, but can talk about the meetings behind other countries’ backs.
  4. The PES is invited.
  5. The PES will send a report about each meeting to the European Parliament.
  6. The PES will tell non-Eurozone countries what happened at the meetings.

Article 13

  1. There will also be conferences for Eurozone countries and members of the European Parliament get to go. And wear party hats.

Title VI: General and Final Provisions

Article 14

  1. This treaty has to be approved in each country’s national laws, e.g. Ireland’s constitution.
  2. If it is we’ll kick off on New Year’s Day 2013. Unless Ireland doesn’t vote yes, then we’ll wait till the referendum when they do. They’ll come around.
  3. It will apply to non-Eurozone countries from then too. Again, unless Ireland gets all ‘democratic’ on us.
  4. Starts when everyone agrees on it, basically.
  5. If non-Eurozone countries have approved the treaty, they’re stuck with it if they start using the Euro.

Article 15

  1. If you don’t join now, you can at a later date. Sign now, pay later. Joining the EU? You can still join this treaty too. This means you Albania.

Article 16

  1. After five years we’ll probably make the stuff in this treaty part of European law.

If you’d prefer to read the actual treaty, it’s available here – http://www.european-council.europa.eu/media/639235/st00tscg26_en12.pdf

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