EU turf war on banking union may pose risks to Spain
The European Parliament is fighting for a bigger say in shaping the eurozone banking supervisor in a move which could hurt Spain.
Putting the eurozone's banks and national supervisors under the ultimate authority of the European Central Bank (ECB) should have been a relatively easy task, or so EU leaders thought back in June. This was Germany's precondition for agreeing that ailing banks may access the eurozone fund directly, a demand made by Spain so that the €100 billion loan from the eurozone could be taken off its government debt.
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The plan was to get a final deal in December, so that the new authority can start early 2013 and Spain's debt be alleviated soon afterwards.
But a turf war between the European Parliament and the EU Council representing member states over who has the final say on the freshly tabled legislation is likely to derail the calendar way beyond December.
From a legal point of view, the European Parliament has an equal footing with the Council only when it comes to the existing European Banking Authority (EBA) - a two-year old umbrella organisation of national banking supervisors in all 27 member states.
EBA legislation also has to be amended so as to explain how it will relate to the new supervisor in the eurozone. Voting rights within EBA will be a tricky negotiation, as the 10 non-euro states led by Great Britain fear that the eurozone 'superstate' will overrule them in disputes.
The other legislative proposal, regarding the re-organisation of the ECB and its relation to national supervisors, is to be decided by unanimity within the Council, with the parliament having only a consultative role.
"There is a clear legal base, article 127, and it does not refer to co-decision," Olivier Bailly, spokesman for the EU commission said during a press conference on Thursday (13 September).
The members of the European Parliament responsible for these dossiers have already announced that they want the two draft laws to be dealt with as a "package," however.
"If we are serious about the need for more democratic accountability, Parliament needs to have co-decision powers for this proposal," Belgian centre-right MEP Marianne Thyssen said in a press statement.
German Green MEP Sven Giegold, who will be responsible for the draft bill amending the London-based EBA, told this website that "we will treat the two files together, there will be no separate meetings in the negotiations."
"It all depends on how much the two sides will compromise, but we are willing to do everything as fast as possible. When it comes to risks of banking crises, thoroughness is more important than speed," he added.
Asked whether he shares the worry of some EU diplomats that Spain will run into trouble if there will be no deal by December, Giegold said: "I don't see Spain as a casualty, the current fund is big enough and they have not made the requests yet for bank recapitalisation. This condition to link the ESM and direct bank recapitalisation with European supervision was voted by the council. So it's them who have to speed up."
EU officials point to the fact that most anti-crisis legislation which was supposed to come quickly into force is stuck in the European Parliament: the draft law on obliging banks to hold more capital is blocked because MEPs and member states cannot agree on how to limit bonuses for bankers.
"The debate will be tense. It is not because Council defends its turf, but because MEPs take so long. We simply cannot lose another year," one EU diplomat told journalists on Wednesday.