Friday

29th Mar 2024

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).

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

'Swiftly dial back' interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us