Saturday

18th Jan 2020

Germany sets tone for 'controversial' summit

  • Angela Merkel is 'under no illusion' about the summit ahead (Photo: ec.europa.eu)

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. 30-day free trial.

... or join 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.

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Interview

EU Africa envoy: Europe needs to look beyond migration

Europe's obsession with migration from Africa means it risks losing out the continent's potential when it comes to trade, says the EU's ambassador to the African Union, Ranier Sabatucci. "Africa is a growing continent, it is the future," he says.

News in Brief

  1. 'No objection in principle' on Huawei cooperation, EU says
  2. French aircraft carrier goes to Middle East amid tensions
  3. EU suggests temporary ban on facial recognition
  4. EU industry cries foul on Chinese restrictions
  5. 'Devil in detail', EU warns on US-China trade deal
  6. Trump threatened EU-tariffs over Iran, Germany confirms
  7. EU trade commissioner warns UK of 'brinkmanship'
  8. Germany strikes coal phase-out deal

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Join EUobserver

Support quality EU news

Join us