24th Oct 2016

Van Rompuy to draft plan for deeper economic union

EU leaders have tasked council chief Herman Van Rompuy with drafting a plan on deepening the eurozone's economic union, potentially via an inter-governmental treaty.

After more than five hours of talks on the need to strengthen growth policies while sticking to the already strengthened deficit rules, EU leaders on Wednesday night (23 May) agreed to come back to these issues at a formal summit on 28 June.

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"Our discussion also demonstrated that we need to take the economic and monetary union to a new stage. There was a general consensus that we need to strengthen the economic union to make it commensurate with the monetary union," Van Rompuy said during a press conference at the end of the meeting.

The former Belgian premier added he would work on a report for the June summit with the heads of the European Commission, the European Central Bank and the chairman of eurozone finance ministers.

In recent weeks, European Central Bank chief Mario Draghi has called for a 10-year plan on how to achieve closer fiscal and political union in the eurozone. Economics commissioner Olli Rehn has also indicated he will table ideas in this direction.

Van Rompuy explained his report would not be the definitive plan on deeper economic union, but just an outline of the "main building blocs and the working method to achieve this objective."

Back in 2010, when he co-ordinated a similar exercise on stronger sanctions for deficit sinners in the eurozone, Van Rompuy hit a wall when it came to German-led demands for an EU treaty change. With the UK vetoing a treaty change last year and the Czech Republic opting out, an inter-governmental treaty on fiscal discipline was signed in March among 25 member states.

Van Rompuy said any new legal changes would try and stick to the current EU treaties, but "other hypotheses" such as a new inter-governmental agreement were also on the table.

He placed the issue of eurobonds as part of this long-term effort of shaping a deeper economic union, a compromise stance reflecting Germany's willingness to consider this French-led idea only if a stricter economic governance is in place.

"Colleagues expressed various opinions such as eurobonds in a time perspective or integrated banking supervision and resolution and a common deposit insurance scheme," he said, noting that none of the topics was dealt with in detail.

"Tonight's meeting was about putting pressure, focussing minds and clearing the air," Van Rompuy summed up, adding that the discussion about growth and jobs is not new and neither should it lead to scrapping budget rigour and deficit reduction.

Leaders welcomed a deal between ambassadors and the European Parliament on so-called project bonds - a funding scheme to start in a pilot phase this summer, aimed at spurring investments in southern countries.

A deal on energy efficiency and the single market, as well as agreeing the one issue hampering the implementation of a single EU patent among 25 member states should also be achieved at the June summit. The patent scheme is being held hostage by bickering among France, Germany and the UK on where to have the headquarters for the patent court.

EU leaders also used the opportunity to tell Greece that they want the country to stay in the eurozone as long as it respects its commitments.

"Continuing the vital reforms to restore debt sustainability, foster private investment and reinforce its institutions is the best guarantee for a more prosperous future in the euro area. We expect that after the elections, the new Greek government will make that choice," Van Rompuy said in reference to the 17 June elections which could bring in an anti-bail-out government fuelling fears of a Greek exit from the eurozone.

Despite the message of support, eurozone chief Jean-Claude Juncker confirmed Wednesday reports that officials are preparing contingency plans for a Greek exit from the eurozone.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

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