Friday

22nd Jun 2018

EU commission foresees two treaty changes to reach full integration

  • Jose Manuel Barroso says he's offering the "broadest and most balanced vision" on EMU to date (Photo: consilium.europa.eu)

The EU commission Wednesday published its vision for a "genuine" economic and monetary union (EMU) under which national budgets could be vetoed and a central European budget would allow transfers for troubled countries.

The process would require two rounds of treaty change – one within the next five years and another more profound exercise in the longer-term.

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.

... our join as a group

The 52-page blueprints emphasises the need for the eurozone to be able to "integrate quicker and deeper" than the rest of the EU, with the eurozone now largely seen as paying for being established as a political project without the fundamental economic and financial structures to back it up.

Ideas for the future include coordinating national tax and employment policies, eurobonds, and a eurozone budget managed by a treasury in the European Commission.

European Commission President Jose Manuel Barroso said the "main message" of the document is that both discipline and solidarity are needed for the EMU to survive.

The paper envisages progress in three steps.

Within the next 18 months, the EU should set up a banking union and establish a "convergence and competitiveness instrument" - money that member states would use to undertake structural reforms. Countries with a budget deficit breaking EU rules would be obliged to use the instrument.

Within five years, the "convergence instrument" would be built up into a separate eurozone budget that would be funded by own taxes in the eurozone.

This time frame would also see "further budgetary coordination (including the possibility to require amendments to national budgets or to veto them)," says the paper.

There should be short-term eurobonds - the pooling of euro states' debt - and a redemption fund for states with large public debt. These steps would need a treaty change.

Other steps to consider would be giving "clear competence for the EU level to harmonise national budgetary laws and to have recourse to the Court of Justice in case of non-compliance."

Final steps to full economic and monetary union would only be taken in the "longer term" and would require "major treaty reform" suggests the paper.

This would likely include a possibly large central budget with stabilisers – meaning money would be transferred to member states in trouble.

“As a final destination it would involve a political union with a central budget as its own fiscal capacity and a means of imposing budgetary and economic decisions on its members.”

Noting the “degree” of sovereignty member states would have to hand to Brussels, the paper suggests that the European Parliament “primarily” needs to ensure the democratic nature of the process.

The blueprint underlines that intergovernmentalism – where governments alone take decisions – would undermine the “accountability” of the set-up.

The paper is to feed into a report on the future of economic and monetary union to be discussed by EU leaders next month.

Many of the ideas proposed have already cropped in other commission papers but the main stumbling block remains unchanged – the political will of member states.

Greek bailout exit takes shape

At a meeting next week, eurozone finance ministers and the IMF are expected to agree on new cash, debt relief measures, and a monitoring mechanism to ensure that Greece can live without international aid for the first time since 2010.

Analysis

Beyond US dispute, EU still aiming at China

On the day it outlined its reaction to US tariffs on steel and aluminium, the EU commission also launched a case against China on property rights - an issue on which EU and US are working hand-in-hand.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

News in Brief

  1. Romania's ruling party leader gets jail sentence
  2. EU states defer individual decisions on asylum reforms
  3. Commission opens case on Qatar gas flow
  4. EU adopts posted workers directive
  5. EU leaders to call for 'coordinated plan' on AI
  6. May passes Brexit bill after rebels accept compromise
  7. Pope: populists 'creating a psychosis' on migrants
  8. MEPs want to restrict use of antibiotics

Stakeholders' Highlights

  1. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  2. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  3. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  4. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  5. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  6. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  7. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  8. Mission of China to the EUChina: Work Together for a Better Globalisation
  9. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  10. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  11. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  12. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network

Join EUobserver

Support quality EU news

Join us