Wednesday

18th Oct 2017

Rehn to get increased economic powers

EU monetary affairs commissioner Olli Rehn is to be given extra authority to supervise national fiscal policies, as the commission moves quickly to centralise economic governance powers in Brussels.

"[Rehn] will become deputy-head of the commission for economic and monetary affairs and the euro," and will have "additional working instruments," European Commission chief Jose Manuel Barroso told the European parliament on Thursday (27 October).

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"This is the best way to guarantee independence, objectivity and efficiency in the exercise of the Commission's responsibility of coordination, surveillance and enforcement in the area of economic governance of the union and of the euro area in particular,” said Barroso.

It is also a way of making sure that economic governance stays within the hands of the commission, amid fears that eurozone member states would club together and make their own rules and institutions.

"Having a commissioner tasked especially with the euro shows that we want euro governance to happen within a communal framework," said the commission president.

The announcement came after a gruelling meeting of eurozone leaders that ran from Wednesday into the early hours of Thursday morning in which they managed to agree the broad outlines of bank recapitalisation, private sector loss on Greek debt and beefing up the eurozone bailout fund.

The final conclusions also state that eurozone leaders welcome the intention “to strengthen ... the role of the competent commissioner for closer monitoring and additional enforcement."

While the detail of the new powers are unclear, officials indicate Rehn would have more say over ensuring member states do not break deficit and debt rules.

The move is an important first step towards the calls from some member states to have a eurozone finance minister or at the very least a powerful economy commissioner.

Dutch Prime Minister Mark Rutte recently called for a super commissioner who would be able to intervene directly in the running of a fiscally misbehaving country, eventually even making it a "ward" of the commission.

Talking to MEPs, Barroso gave an indication of Rehn's future responsibilities.

"We are in the current situation not only because there was irresponsible financial behaviour but also because our member states, most of them, did not respect their commitments regarding the stability and growth pact."

Some member states did not report accurately their national statistics and at least one state manipulated the statistics in a fraudulent way. This is exactly the kind of behaviour that we cannot accept in the future," said the commission president.

He also noted that for a "true European economic union" both convergence and discipline is needed.

Fast-moving changes

While the EU's response to the eurozone crisis has been criticised for being too slow - the scope of Thursday's deal is already being questioned - it is moving quickly ahead with centralising economic governance powers in Brussels.

Along with the Rehn move, the commission now also has the authority to scrutinise national budgets and make suggestions for member state spending plans. Meanwhile, there is already talk about further strengthen these powers by way of a treaty change.

The effects are already clearly being felt on the ground in some countries. Greece, subject to a EU-IMF bailout and seen as slow in implementing austerity measures, is now to have permanent on-the-ground supervision of its policy-making.

And Italy, the country that eurozone officials fear may be caught up in eurozone contagion, has been made to promise to implement a raft of reforms. The commission said it would closely "measure and monitor" the pace of progress.

Banks stonewall EU leaders on haircut

Negotiations between EU leaders and representatives of the global banking industry over the scale of losses the financial institutions are willing to take on Greek debt have all but broken down.

Autumn forecast: EU economy in ‘dangerous territory’

Europe’s economy has deteriorated dramatically since the spring and growth has come to a standstill, the European Commission said on Thursday, warning that the bloc could very easily slip back into recession should “any further bad news” materialise.

Parliament wants equal powers over EU economic governance

Warning the “democratic credibility” of the EU has been damaged as economic integration proceeds with little input from ordinary people, the European Parliament has demanded that it be given equal powers to the other EU institutions over national budgetary control.

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