Thursday

27th Jul 2017

'Disappointment' for those expecting ambitious EU summit

EU leaders will gather in Brussels on Thursday and Friday (13-14 December), but market pressure has waned recently, taking member states' ambitions for further steps to economic and monetary union with it.

The scaling back of ambition forced EU council President Herman Van Rompuy to re-write a timetable on further economic integration to make it less prescriptive.

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  • EU summitry in 2012 is set to end on a modest note (Photo: ec.europa.eu)

New wording in the second set of draft summit conclusions - the first were published early last week and were strongly criticised by member state officials - abandons a three-step timetable for reform in favour of looser wording.

A mooted fiscal capacity as well as text on "common decision-making" on national budgets and "progressive pooling of economic sovereignty" also failed to make it into the updated conclusions, published on Wednesday (12 December).

Those hoping for an "ambitious blueprint" will be disappointed, said one diplomat, noting that "there has been a dynamic in this crisis that leaders do not act unless [they are] under pressure."

Since European Central Bank (ECB) chief Mario Draghi over the summer announced, and later demonstrated, that he would do "whatever it takes" to save the euro, the sense of urgency that prevailed over recent months has diminished.

The agreement by EU finance ministers on Wednesday on setting up a single supervisory mechanism for Europe's banks has also led to the why-rush-to-do-more feeling among governments.

One EU official noted that the agreement - under which the ECB could take up the supervisory duty on 1 January 2014 - was, by EU standards, conducted at the "speed of light."

The draft conclusions suggest that euro member states set up "contractual arrangements" for reforms with the EU institutions - but again the wording has been watered down.

The "contracts" issue will be revisited in March 2013 with member states not wanting to commit to the idea now because there are too many open questions.

The paper calls for the European Commission to come forward with a proposal on an EU-wide banking resolution law in 2013 with an "effective common backstop" - money for when banks are trouble - but only after current, and weaker, legislative proposals in this area have been agreed.

The conclusions include the now obligatory reference to the need for democratic legitimacy and accountability as Brussels takes on more budgetary powers at the expense of national authorities - but the wording here is also vague.

"The question for Van Rompuy is how far he tries to preserve some of the little details in [the paper]," said an EU diplomat.

"Many [member states] are taking the politically pragmatic point of view that if [profound reform] is only going to be debated after 2014, the year of the European elections, why bother getting into arguments now," the diplomat added.

There is also a sense of bemusement among some member states that Germany - which in 2011 cajoled almost all other governments into a quick agreement on a fiscal discipline treaty largely written by Berlin - is now foremost among those putting the brakes on integration.

Meanwhile, the lack of a sense of urgency raises the broader question of how long ECB chief Mario Draghi - one of the first to call for a longterm plan for the eurozone - can prop up ailing euro states if he is not getting the political reward of further economic and monetary integration that he expected in return.

Germany to EU: stop talking about new budget schemes

German officials are in eye-rolling mode ahead of an EU summit about plans to create a eurozone "shock absorption fund" and say leaders should focus on reforms and stick to their promises.

Leaders disagree on future euro integration

EU leaders early Friday had different views on how to deepen integration in the eurozone, with Germany keen to limit a new budget for reforms to €20 billion.

Greece looking at bond market return

Greece could issue 3-year bonds as early as this week, for the first time in three years, amid mixed signs from its creditors and rating agencies.

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