France's Moscovici struggles to convince EU lawmakers

By Jan Strupczewski and Alastair Macdonald

BRUSSELS (Reuters) - France's Pierre Moscovici struggled to convince European Union lawmakers on Thursday he could enforce budget rules that his own country has repeatedly breached, as the formation of a new European Commission turned into a tit-for-tat political battle.

The Socialist, who was finance minister in Paris until six months ago, promised to apply the bloc's deficit rules equally to all euro zone states, including his own, if confirmed as economic and monetary affairs commissioner.

But he faced a barrage of scepticism from conservative lawmakers who asked how he could credibly recommend reforms and cuts to ministers that he had not implemented himself at home.

"Budgetary rules have to be respected, and respected by all member states, without being harder on some more than others," Moscovici told a European Parliament confirmation hearing.

"You can count on me to be a fair and impartial arbiter," he said, promising: "The rules will be my only compass."

Faced with repeated identical questions, he exclaimed in French, German and English: "All countries have to respect the pact."

With the delicate political balance of his proposed team threatening to unravel, incoming Commission chief Jean-Claude Juncker stepped in to try to quell criticism of his nominees.

"President-elect Juncker believes that all candidates so far have convincingly demonstrated their competence and European commitment," his spokesman told reporters.

Parliamentary sources said a decision on whether to confirm Moscovici could be delayed until next week and could be treated as part of a political package deal involving other appointments being disputed among rival party groups.

"ANIMAL FARM COMMISSIONER"

Moscovici's torrid interrogation came a day after France defied its partners by unveiling a 2015 budget that will again miss EU targets, saying it would need two more years - on top of a two-year delay already granted - to bring its deficit below the treaty limit of 3 percent of national output.

Echoing Paris, he said deficits could not be cut without economic growth, and he would use all the flexibility available in the EU's rulebook to promote investment, growth and jobs.

He drew gasps of incredulity when he said Paris had never broken the rules, since each of its budgets had been approved in advance and in execution by the EU authorities.

Dutch conservative Esther de Lange asked whether he would be "an Animal Farm commissioner for whom some countries are more equal than others". Her Austrian colleague, Othmar Karas, spoke of a "credibility gap" between what Moscovici said he would do now and what he had not done at home.

The tough questioning appeared to be partly retaliation for the rough ride left-wing and Greens lawmakers gave on Wednesday to the Spanish conservative nominee for EU energy and climate action chief, Miguel Arias Canete, over his family links to the oil industry.

The left and Greens also forced the British nominee for financial services commissioner, Jonathan Hill, to resit his examination next week after he stumbled over detailed questions on Eurobonds, high frequency trading, shadow banking and his plans for a proposed EU capital markets union.

Nonetheless, opposition to Hill appeared muted, despite the British Conservatives not being part of one of the main groups in parliament, and a reluctance to alienate an increasingly Eurosceptical London government may help Hill secure the post.

The centre-left has also demanded further, written, answers from the right-wing Hungarian nominated to the education and culture brief and the Czech centrist pick for justice.

REVENGE

Centre-right lawmakers were out for revenge and Socialist Moscovici was an obvious target given Paris' budget woes.

"Moscovici is hardly credible. He did not convince his own government to ensure compliance with the Stability Pact and to enforce deep economic reforms. How will he be able to convince 28 member states?" German conservative Burkhard Balz said after the hearing in a statement that sounded critical but did not rule out eventual confirmation for the Frenchman.

Claude Turmes, a Green from Luxembourg, spoke of a "dirty game behind the scenes" in which the right was blocking a committee vote that could kill off Arias Canete's candidacy and threatening to block the high-profile appointment of Moscovici.

Juncker had hoped a broad understanding between his centre-right and the mainstream left could secure swift passage of a team he says can revive the economy and win back voters who returned a phalanx of anti-EU parties to the parliament in May.

But many lawmakers are also keen to demonstrate their independence from the Commission, and from the 28 governments of the Union, each of which nominates one member to the executive.

While delay may discomfit Juncker and the government leaders who supported him, smaller groups in parliament welcomed debate.

The Greens' Sven Giegold said a left-right "grand coalition" had now "broken down", adding: "This is a good result for European democracy since otherwise the backroom political dealing would have carried the risk of the European Parliament jeopardising its right to examine commissioner candidates."

After the approval of the first 10 of the nominees in the first two days of hearings, the angry committee room scenes threatened to disrupt a timetable for the new Commission to be approved en bloc on Oct. 22 and take office on Nov. 1.

Any delay could draw national leaders into the dispute and might, if prolonged, leave the outgoing team of Jose Manuel Barroso as a lame duck to handle the confrontation with Russia over Ukraine, trade negotiations with Washington and rumbling divisions over austerity and deficits in the euro zone.

In another tough hearing, Hungary's Tibor Navracsics had to rebuff questions on his role in a Budapest government that has clashed with the EU over its treatment of minorities and laws that Brussels says restricted the media and free speech.

The centre-left welcomed what it called his apparent "conversion to the EU faith" but asked him to answer further questions in writing before letting his appointment go forward. It set the same exercise for Czech justice nominee Vera Jourova.

Lowering the temperature, however, the left broadly gave its blessing to conservatives from Poland, Ireland, Bulgaria and Belgium who were heard on Wednesday and Thursday. Few problems were foreseen for Danish liberal Margrethe Vestager, questioned late on Thursday, securing the antitrust brief.

(Additional reporting by Barbara Lewis; Writing by Alastair Macdonald and Paul Taylor; Editing by Robin Pomeroy)