Saturday

28th May 2016

France and Germany in tussle over EU economics post

  • Schaeuble - not keen on France having in the EU economic affairs portfolio (Photo: consilium.europa.eu)

Germany and France are locked in a tussle about who should be the next EU economic affairs commissioner, a decision that will send a key symbolic message about how euro rules will be implemented in the future.

Paris wants the portfolio for itself and Pierre Moscovici, a Socialist and former finance minister, is the touted name.

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But Berlin has baulked at the idea, suggesting it is not appropriate for a French person to hold the post when their native country is having difficulty adhering to euro rules.

France has already had two EU deadline extensions, as it tries to bring its budget deficit below the required three percent of GDP threshold.

At an event earlier this month, German finance minister Wolfgang Schaeuble said: "France will present figures in autumn and the commission will examine them and if it has doubts about the figures then that’s a real problem.”

He later said his opposition was "not about Mr Moscovici".

However, a joint interview between Schaeuble and his French counterpart Michel Sapin with newspapers Handelsblatt and Les Echoes, published Sunday, illustrates the depth of the differences.

Referring to who should run the economics portfolio, held until very recently by Finland's Olli Rehn, a fiscal hawk, Schaeuble said: "These types of decisions are very sensitive. These decisions have a symbolic weight and we have to keep that in mind."

Sapin, for his part, said that "it is legitimate that France has an important post in the commission. An economic post would, to my mind, correspond to France's economic power and its ability to contribute to good working of the EU institutions."

Countering Berlin's argument that it would be difficult for a French commissioner to be strict in applying the euro rules to France, Sapin said that some people have said it could be "dangerous" for France to have the dossier because that person would want to be "even more irreproachable and even harder on France. So that could reassure German opinion".

The dispute comes amid wider division, broadly between northern and southern member states, about how the euro's rules should be interpreted.

Italy has led the charge for them to be loosened to allow for more public investment to spur growth, while France argues that struggling states should be allowed more time to get their fiscal houses in order.

Germany, which has led the eurozone's response to the crisis over the past five years, fears these steps mean that countries are simply avoiding doing necessary structual reforms.

The simmering dispute, which has come to the fore as Brussels has its five-year changing of the guard this year, has crystallised over the commission's economics commissioner, who has discretionary power over how the euro's rules are applied.

Outlining the difference in vision, Sapin noted that "the question is what is the best policy to pursue for Europe, which is exiting a crisis of exceptional gravity, to find the path to solid and sustainable growth."

Finance ministers baulk at tax-avoidance rules

Member states will discuss again in June a proposed directive to outlaw practices used by large companies to avoid paying taxes. Meanwhile, the European Parliament makes progress on its probe of Panama Papers.

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