8th Apr 2020

Germany sets tone for 'controversial' summit

  • Angela Merkel is 'under no illusion' about the summit ahead (Photo:

On the eve of what she expects to be a "controversial" summit, German Chancellor Angela Merkel has challenged other member states on whether they are ready to relinquish yet more budgetary oversight to Brussels - Berlin's sine qua non for future debt sharing.

She said in a speech on Wednesday (27 June) that a eurozone integration blueprint circulated on Monday got the balance wrong between budgetary control and shared liability.

Read and decide

Join EUobserver today

Support quality EU news

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

... or subscribe as a group

The paper, put together by European Council President Herman Van Rompuy, gives "priority" to mutualising debt and puts "more controls and legal obligations" in second place and then only "very imprecisely."

"Accountability and control clearly stand in disproportion in this report," said the Chancellor.

Eurobonds - mentioned in the summit paper as a medium-term objective - would not only go against the German constitution but are also "economically wrong and counterproductive."

What is needed is more EU powers to step in when national budgets get out of line, she noted.

"I will sound out whether other member states are prepared to take this path - including necessary treaty change," she said.

The German leader's tough words set the scene for what is likely to be a bruising summit beginning Thursday.

The extra supervisory powers that Merkel is calling for chip away at what is the heart of a state's powers - the right to decide how and when to spend money.

Berlin has been increasingly grumbling about other capitals calling on Germany to open its pockets but being unprepared to accept greater external controls.

A key issue is relations with France. Merkel will meet President Francois Hollande in Paris on Wednesday evening. Hollande has been pressing Germany to show more solidarity before Paris will accept a loss of sovereignty - traditionally a hard-sell among Hollande's own socialists.

Meanwhile, Spain and particularly too-big-to-fail Italy are the other two main players in the eurozone game.

While Merkel is focussing on long term structural change to the eurozone, Madrid and Rome are looking for quick solutions as their borrowing costs have jumped upwards.

One of the ideas pushed by Italian leader Mario Monti - who says he is prepared to sweat out a days-long summit to get a satisfactory outcome - is that the eurozone rescue fund buy the bonds of troubled but well-intentioned eurozone countries to lower borrowing costs.

Another mooted plan is to have the eurozone fund directly recapitalise troubled banks - rather than going via the government and pushing a state further into debt - something particularly relevant to Spain.

"I have no illusions. I am expecting controversial discussions in Brussels," said the Chancellor of the summit, adding that "many eyes" will be on Germany.

Merkel under pressure to move on Spain and Italy

With borrowing costs in Spain and Italy at unprecedented highs, Germany's Angela Merkel came under pressure at the G20 summit to let eurozone bail-out funds help them out.

No breakthrough at EU budget summit

EU leaders failed to reach agreement on the EU's long-term budget, as richer states and poorer 'cohesion countries' locked horns. The impasse continues over how to fund the Brexit gap.

EU leaders struggling to break budget deadlock

Cuts to innovation, space, neighbourhood and other programme-spending push down the latest budget proposal on the table of EU leaders. Rebates could stay on, to win the support of the net-payers for a deal.


ECB promises (almost) whatever it takes

The eurozone's central bank has promised to buy up to €750bn of government and private bonds in new pandemic counter-measures.


What does coronavirus 'Black Swan' mean for markets?

Falling demand and prices for oil and raw materials will revive the risk of deflation. The collapse in international trade and long-term rethinking of China's role as the major hub for the production of consumer goods and electronics is inevitable.

Stakeholders' Highlights

  1. UNESDAMaking Europe’s Economy Circular – the time is now
  2. Nordic Council of MinistersScottish parliament seeks closer collaboration with the Nordic Council
  3. UNESDAFrom Linear to Circular – check out UNESDA's new blog
  4. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  5. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  6. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms

Join EUobserver

Support quality EU news

Join us