Thursday

13th May 2021

Euro rules in crisis after stormy meeting

It took until four in the morning, but it looks as if euro zone finance ministers may have hammered the final nail into the coffin of its beleagured economic rules.

Meeting in Brussels, ministers from the 12 countries that share the euro were voting on whether to enforce European Commission recommendations to France and Germany that would mean the two largest euro zone economies having to reduce their spending by billions of euro.

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  • The finance ministers' meeting broke up into bi-lateral talks in a effort to break the deadlock (Photo: European Commission)

But after a marathon nine-hour session, they voted to replace the Commission's recommendations with their own, more lenient, text and in the process plunged both the euro's economic rules and relations between the Commission and member states into crisis.

No agreement ... on anything

The Commission (represented by economic and monetary affairs commissioner Pedro Solbes) and the member states (represented by Italian finance minister Giulio Tremonti) seemed unable to agree on anything at all.

Mr Solbes said that he "deeply regretted" the ministers' decision, adding that the rules have been "used wrongly and mistakenly ... to satisfy the views of some member states".

If the ministers' text is adopted, they will be following "neither the spirit nor the letter" of the rules, said the commissioner, concluding, "I am completely disappointed".

But Mr Tremonti countered that the new text was both within the spirit and the letter of the rules and was "a more intelligent interpretation" of them.

Sharp words

Neither could the two men agree on what the new text actually contains.

Mr Tremonti said that the text that has replaced the Commission's recommendations was basically unchanged. He claimed that the amount of spending France and Germany will be asked to cut remains the same.

But Mr Solbes' spokesman later completely contradicted the Italian minister, saying that the figures were different and that certain spending cuts would be made dependent on economic growth.

The storminess of the meeting was evident as seemingly neither Mr Solbes nor Mr Tremonti could bear to look at each other during the press conference.

Member States split

If relations between the Commission and the Member States look dismal after the meeting, then so do relations between certain Member States.

Four EU countries - Austria, the Netherlands, Finland and Spain - voted against changing the recommendation, but they were outvoted.

The Austrian finance minister, Karl-Heinz Grasser told reporters before the meeting, "I can only say that smaller countries – and also the Austrian taxpayer, should not pay the bill for the exploding deficits of large countries, in this case, of France and Germany".

Marathon session

The disagreements were so irreconcilable at one point - just before midnight - that a series of bilateral meetings was set up in an effort to break the deadlock.

Three hours later, the full 12 regrouped for a final hour of talks.

The new text now needs to be approved later today (Tuesday 25 November) by the full EU-15 group of finance ministers - bringing in the non-euro countries of Denmark, Sweden and the UK.

However, this is expected to be a formality. A "qualified majority" is necessary to pass the new text and the four opposing countries do not have the weight required to overturn it.

Moreover, the UK is expected to vote with France and Germany, lending its own considerable voting weight to the new proposals.

On to the courts?

The possibility has been raised that the Commission could take the Member States to the European Court of Justice for breaking the Treaties.

But Mr Solbes was not willing to speculate on this, saying that he will "reserve the right to examine the implications of the decision".

He did not, however, rule out legal action.

Fury and recrimination over euro rules

As more details emerged about the deal struck to save France and Germany from potential European Commission fines, ministers, commissioners, MEPs and spokespeople swiped at each other both in public and behind the scenes.

Member states face Commission legal action on euro rules

EU finance ministers acted illegally last November when they voted to prevent disciplinary measures being taken against France and Germany under the euro rules, according to the Commission's lawyers. The Commission will decide next week whether to take member states to court.

Brussels set to go ahead with legal action on euro rules

The European Commission is set to decide tomorrow (Tuesday 13 January) that it will push ahead with legal action against euro zone member states for their effective suspension of the euro rules last November. But the controversial issue has split the Brussels body and the vote is still too close to call with certainty.

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