Thursday

27th Apr 2017

EU commission to outline plans for political union

  • The commission will outline 'the features of an economic and political union required to make mutualisation rational for all' (Photo: ec.europa.eu)

The European Commission has said it will soon bring forward plans for an economic and political union it says is necessary for the creation of debt-mutualising eurobonds - one of the most controversial proposed solutions to the current eurozone crisis.

"We need to reflect what kind of European union would be required to deepen economic and political integration, for instance so that joint issuance of debt would make sense for all member states sharing the single currency," economics commissioner Olli Rehn told MEPs on Tuesday (22 May).

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

He said the commission would "soon" come up with a "medium to long term roadmap" outlining the necessary deeper fiscal and economic integration that would minimise moral hazard - member states running up debt because they know it will be paid by others - and ensure "fiscal sustainability."

"In other words," the commissioner added, "the features of an economic and political union required to make mutualisation rational for all."

With his statement, Rehn has put the eurobonds issue firmly back on the table just ahead of a meeting of EU leaders in Brussels on Wednesday (23 May) to discuss growth strategies for Europe.

The commission first published an ideas paper on various types of eurobonds in November last year. The paper was immediately shot down by Germany, the eurozone's paymaster.

Germany remains firmly against the idea arguing that too many other elements - such as guaranteed fiscal discipline - have to be in place before it can be discussed.

But the election of Socialist Francois Hollande as president of France earlier this month has altered the nature of the policy debate in Europe, taking it away from a one-dimensional focus on austerity towards a discussion that includes ideas to stimulate economic growth.

Hollande has said he will raise the issue of eurobonds with German Chancellor Angela Merkel during Wednesday's summit. German officials have countered that the idea is "not a legitimate theme" for the meeting.

The summit has been billed by EU president Herman Van Rompuy - who has in the past also said that mutualisation of euro debt must be discussed - as a no-decisions but no-taboos get-together.

Meanwhile, the institutional changes implied by Rehn's statement to MEPs have a potentially more receptive audience in Germany and beyond.

Last week, German finance minister Wolfgang Schaeuble said the European Commission should be the government of Europe and its president should be directly elected.

The eurozone crisis has made erstwhile foes of further EU integration think twice as well.

Britain, outside the euro and one of its more sceptical members, has also started making public statements about the need for fiscal and political union, with many arguing that the eurozone's woes have been exacerbated by the fact that the EU lacked the tools - such as a central transfer system - to effectively deal with it.

Eurogroup makes 'progress' on Greek deal

Eurozone ministers endorsed an agreement in principle between the Greek government and its creditors over a new package of reforms. But talks on fiscal targets and debt could still block a final agreement.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Commission stops German-British stock merger

The decision to block the merger of the London Stock Exchange and Deutsche Boerse was expected, as negotiations between the parties broke down a few weeks ago.

SMEs lack support in EU financial plan

The European Commission's plan for a capital markets union is said to be aimed at small and medium-sized enterprises, but many could end up being left out in the cold.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Investigation

MEPs oppose EU agency to prevent Dieselgate II

The European Parliament said on Tuesday that there should be more EU oversight on how cars are approved, but stopped short of calling for an independent EU agency.

Stakeholders' Highlights

  1. ECR GroupSyed Kamall: We Need a New, More Honest Relationship With Turkey
  2. Counter BalanceParliament Sends Strong Signal to the EIB: Time to Act
  3. ACCARisks and Opportunities of Blockchain and Shared Ledgers Technologies in Financial Services
  4. UNICEFRace Against Time to Save Millions of Lives in Yemen
  5. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  6. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  7. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  8. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  9. ACCAEconomic Confidence at Highest Since 2015
  10. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  11. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process
  12. Nordic Council of MinistersNordic Region and the US: A Time of Warlike Rhetoric and Militarisation?