Thursday

21st Mar 2019

Discord simmers ahead of EU summit

Thursday's (18 October) gathering of EU leaders is being billed - by the Germans at least - as a "stepping stone" summit that should lead to firm decisions in December on how to deepen eurozone political integration. But others want answers on key issues now.

The greatest potential flashpoint for the meeting - meant to be a "no decisions" summit - is trying to agree what was agreed in June last time leaders met.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

At the time eurozone leaders concluded that when an "effective single supervisory mechanism" is established, the permanent eurozone bailout fund (ESM) could then recapitalise banks directly.

Spain, looking to keep bank debts off its state books, was euphoric. Ireland, which won specific wording on improving the sustainability of its debt, was too. They and others assumed a quick deal on a banking supervisor was imminent.

Germany, Finland and the Netherlands then put on the brakes.

They made it clear they think the ESM should only finance bank bailouts once the supervisory mechanism is set up and that it should not salvage old debt.

Both sides claim the other is misinterpreting the text. Ahead of the summit there has been much grumbling.

In a combative summit-eve interview with five European newspapers, French President Francois Hollande said Berlin should stop blocking what it agreed in June and that a banking union should be ready by the end of the year. Irish Prime Minister Enda Kenny at a meeting in Bucharest Thursday said much the same.

But Germany is not backing down.

"Effective and established," these are the key words, said one German government source on Wednesday.

"Read the text from June again. It does not say anywhere that the Council has to agree something by the end of the year. Even less so does it say that on the first of January 2013 a new system will be in place and be effective."

It is up to those interpreting the text to explain why they have such "illusions," added the official.

Stabilising the eurozone

Meanwhile, formally on the table is a discussion on what steps need to be taken to "stabilise" the eurozone. Decisions are to be taken only in December.

To focus minds, there is a paper written by EU Council President Herman Van Rompuy containing rudimentary ideas for a eurozone budget line, a treasury, increased EU-level centralisation of budgetary and economic governance powers and a debt redemption fund.

It is a direct response to a German push for fiscal union.

But the paper, written after consultation with all member states, reflects deep division between Paris and Berlin.

The two countries are the counterpoints in the discussion on how much fiscal discipline can be demanded from a member state before it is shown some fiscal solidarity. Germany wants more of the former and less of the latter.

One issue in the Van Rompuy paper highlights the differences between the two camps - the idea for a fiscal capacity for the eurozone.

To German eyes, this should be a limited pot of money, perhaps financed by a financial transactions tax, which would be used as "incentive" for countries to undertake structural reforms.

The French and other southern states, who would like to call it a eurozone budget, interpret the idea much more expansively.

Highlighting the tensions, Hollande called on German Chancellor Angela Merkel to "put Europe's interests first" rather than being so conscious of the domestic scene.

He also directly challenged Merkel's refusal to countenance eurobonds - the mutualisation of eurozone debt - saying: "I know the sensitivity of our German friends to the problem of supervision. Whoever pays should control, whoever pays should sanction. I agree. But budgetary union should be completed by a partial mutualisation of debts through eurobonds."

Forming the backdrop to the summit, but not on the actual agenda, are Greece - desperately waiting for a further tranche of bailout money - and Spain, on the brink of asking for a bailout.

Also at the back of everyone's mind is how to manage a union of 27 states, where 10 are not members of the single currency.

Again France and Germany differ. "We want an open construction," says Berlin of any future deeper political integration. France is less so inclined.

News in Brief

  1. EPP proposes suspension for Orban's Fidesz
  2. May asks for Brexit extension until 30 June
  3. Juncker: Brexit decision unlikely this week
  4. North Macedonia EU-membership talks set for June
  5. EU ups benefits rights for mobile workers
  6. Chinese leader visits Italy, France as Rome joins 'Silk Road'
  7. EU agrees to sanction political parties breaching data rules
  8. EPP votes Wednesday on future of Orban's party

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  2. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  3. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  4. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  5. Nordic Council of MinistersNordic commitment to driving global gender equality
  6. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  7. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  8. Nordic Council of MinistersNordic talks on parental leave at the UN
  9. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  10. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  11. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  12. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership

Latest News

  1. May tosses Brexit spanner into EU machinery
  2. Centre-right EPP faces showdown with Orban
  3. A compromise proposal for the Article 50 extension
  4. US glyphosate verdict gives ammunition to EU activists
  5. Have a good reason for Brexit extension, Barnier tells UK
  6. EU countries push for new rule of law surveillance
  7. EU rolls out €525m for military projects, but bars illegal tech
  8. May to seek Brexit extension amid UK 'constitutional crisis'

Stakeholders' Highlights

  1. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  2. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  3. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  4. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  5. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  6. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  7. Nordic Council of MinistersSeminar on disability and user involvement
  8. Nordic Council of MinistersInternational appetite for Nordic food policies
  9. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  10. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  11. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  12. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit

Join EUobserver

Support quality EU news

Join us