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EU ministers collide over timid eurozone reforms
LUXEMBOURG, June 14, 2019 (BSS/AFP) – EU finance ministers wrangled over
watered-down economic reforms Thursday with France hoping the eurozone budget
it has long been pushing for was finally within reach.
Almost a decade after the debt crisis, French President Emmanuel Macron
wants his partners to implement the changes in order to make the single
currency area more resilient to shocks and to tackle the global dominance of
the United States and China.
But resistance to overhauling the eurozone has deepened, amid a budget row
with populist-led Italy, and as richer northern countries grow reluctant to
indulge the budget-busters to the south.
This distrust and hesitance has plagued the eurozone since it was launched
in 2002, a disunity that economists say limits growth and invites crisis.
Ministers are discussing France’s flagship reform of a eurozone budget
that has been scaled back by opponents led by the Netherlands that fear a
transfer of wealth to Italy, Greece or Spain.
“We are not far from a consensus,” French Finance Minister Bruno Le Maire
said on Thursday as he arrived for talks that were expected to last late into
the night.
Such a step would be “a major breakthrough in strengthening the eurozone,”
he said.
“We are close,” said German Finance Minister Olaf Scholz who added that
approval was widespread for a Franco-German compromise on the delicate
matter.
– Not a budget –
The EU ministers are officially not negotiating a budget — which would be
too politically sensitive — but something called the Budgetary Instrument
for Competitiveness and Convergence, a fund with limited firepower to be used
to back reforms.
The cumbersome renaming comes at the demand of the Dutch, who have only
accepted the instrument on condition that it remains an extremely modest
affair.
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The skeleton of Macron’s plan on the table comes after months of
negotiating the broad elements, including spending priorities, source of
revenues, and who should ultimately wield control over its decisions.
A European source said it was the last element that would keep ministers
up late with the Netherlands and others insisting the budget remains under
the auspices of the EU budget.
As such, the budget’s firepower would remain at a modest 17 billion euros
over seven years with no chance of expansion and under the authority of the
EU’s 27 member states (after the exit of Britain).
Macron had originally demanded an amount of several hundred billion euros
to be used to stabilise economically weak countries, but this was swiftly
slapped down.
The young French leader also wanted the creation of a eurozone finance
minister, an idea that was fast cast aside under pressure from Germany, which
prefers that power over the economy remains national.
– ‘Impasse’ –
Ignored for now is a Europe-wide deposit insurance scheme, which is
supposed to be the last pillar of an EU banking union set up after a series
of bank failures during the worst of the crisis.
“Regrettably, the impasse on this project is still there. No tangible
progress has been made,” said EU commission vice president Valdis Dombrovskis
on Wednesday.
The deposit scheme is resisted by Germany, Finland and other northern
European countries that fear being put on the hook for deposits in fragile
countries such as Italy or Greece.
Ministers also discussed Italy with Rome in infraction of EU budget rules
and in danger of major fines inflicted by its currency zone partners.
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