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Sweden can back eurozone pact: Riksdag

Sweden's parliament on Friday gave as expected the government a green light to support the eurozone pact on fiscal discipline at an EU summit next week, as long as certain terms are met.

Sweden can back eurozone pact: Riksdag

The parliament’s EU affairs “committee concluded that the government had support for its position,” committee spokesman Tommy Forsell told AFP, pointing out that this meant Prime Minister Frederik Reinfeldt was free to negotiate terms with Brussels for joining the pact.

With its blessing, the committee formalized the mandate the minority centre-right government received when it reached a deal with the main opposition Social Democrats Thursday, giving it a parliamentary majority.

The government is strongly in favour of the euro pact, but the Social Democrats had long threatened to block Sweden’s support of the pact for fear it was a “back door” into the eurozone.

The Scandinavian country rejected the euro in a 2003 referendum.

While Sweden is not a eurozone member, it has among the strongest public finances in Europe and is therefore seen as an influential player in European efforts to improve financial discipline.

The government and the Social Democrats agreed on four conditions that Sweden will push for at the negotiating table in Brussels next week, including demands that Sweden not be required to transfer any decision-making power on its budget from the national parliament and that Sweden be granted more influence.

The Social Democrats said Thursday that one way Sweden could be guaranteed more influence was by being given a seat at eurozone summits where the pact is up for discussion.

Eurozone versus full EU summits are a sensitive topic for some governments, notably France, which refuses to grant access to the 10 other EU states more than once a year.

During discussions Friday at the EU affairs committee, however, the demand for a seat at the table did not seem set in stone.

“There are other solutions. For instance by helping with preparations (for the summits), by setting exact terms for what can be discussed by euro countries and non-euro countries,” said state secretary Katarina Areskoug Mascarenhas, who was standing in for Reinfeldt, who had the stomach flu.

Social Democratic representative Marie Granlund also conceded that “exactly how the influence should be organised is something we can come back to.”

The so-called fiscal “compact” to tighten budgetary discipline and economic governance between the 17 eurozone nations is one of the main issues on the agenda when leaders of the 27-nation EU meet in Brussels on Monday.

All EU states except Britain have agreed to consider signing the fiscal compact, the aim of which is to avoid a repeat of the debt crisis in the eurozone.

The pact is expected to be agreed in principle on Monday before formal acceptance at an EU summit on March 1 and 2.

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COVID-19

Court turns down AfD-led challenge to Germany’s spending in pandemic

The German Constitutional Court rejected challenges Tuesday to Berlin's participation in the European Union's coronavirus recovery fund, but expressed some reservations about the massive package.

Court turns down AfD-led challenge to Germany's spending in pandemic

Germany last year ratified the €750-billion ($790-billion) fund, which offers loans and grants to EU countries hit hardest by the pandemic.

The court in Karlsruhe ruled on two challenges, one submitted by a former founder of the far-right AfD party, and the other by a businessman.

They argued the fund could ultimately lead to Germany, Europe’s biggest economy, having to take on the debts of other EU member states on a permanent basis.

But the Constitutional Court judges ruled the EU measure does not violate Germany’s Basic Law, which forbids the government from sharing other countries’ debts.

READ ALSO: Germany plans return to debt-limit rules in 2023

The judgement noted the government had stressed that the plan was “intended to be a one-time instrument in reaction to an unprecedented crisis”.

It also noted that the German parliament retains “sufficient influence in the decision-making process as to how the funds provided will be used”.

The judges, who ruled six to one against the challenges, did however express some reservations.

They questioned whether paying out such a large amount over the planned period – until 2026 – could really be considered “an exceptional measure” to fight the pandemic.

At least 37 percent of the funds are aimed at achieving climate targets, the judges said, noting it was hard to see a link between combating global warming and the pandemic.

READ ALSO: Germany to fast-track disputed €200 billion energy fund

They also warned against any permanent mechanism that could lead to EU members taking on joint liability over the long term.

Berenberg Bank economist Holger Schmieding said the ruling had “raised serious doubts whether the joint issuance to finance the fund is in line with” EU treaties.

“The German court — once again — emphasised German limits for EU fiscal integration,” he said.

The court had already thrown out a legal challenge, in April 2021, that had initially stopped Berlin from ratifying the financial package.

Along with French President Emmanuel Macron, then chancellor Angela Merkel sketched out the fund in 2020, which eventually was agreed by the EU’s 27 members in December.

The first funds were disbursed in summer 2021, with the most given to Italy and Spain, both hit hard by the pandemic.

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