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28th Sep 2020

Germany opposes Spanish call for EU economic sanctions

  • Homeless people in Madrid - the EU is set to step up debate on a new economic plan over the coming months (Photo: AntarticoNorte)

A call by the Spanish EU presidency for financial sanctions under a new EU long-term growth strategy has sounded alarm bells in Berlin, sharpening debate ahead of a leaders meeting's on economic issues in February.

Speaking in Madrid last week, Spanish Prime Minister Jose Luis Rodríguez Zapatero said there needed to be incentives for member states to promote economic performance, and also "corrective measures" for failure.

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The call has prompted a chilly response from Germany however. The country's economy minister, Rainer Bruderle, said on Saturday (9 January) that he welcomed the idea of better economic co-ordination, but warned against creating "a new bureaucracy."

"I do not think the idea of imposing sanctions on member states for not fulfilling fixed targets is sensible," Mr Bruderle said in a statement. "Up to now, the Lisbon strategy has been based on a partnership approach without sanctions and we ought to continue that."

The Lisbon Strategy is the bloc's current 10-year economic plan, due to expire this year and the subject of much criticism due to its failure to make member states conform with economic targets.

As the EU's largest economy, German support will be crucial in securing European agreement on its future economic direction.

Spanish daily El Pais reports that the idea of potential sanctions and a greater role for Brussels has also met with a lukewarm reception in London and a number of northern capitals.

The debate on how to pull Europe's economy out of its current hole is set to intensify in the coming months, with eurozone figures out on Friday showing unemployment for November hitting 10 percent, the highest rate since the currency was launched a decade ago.

Added to feeble EU growth forecasts of below one percent for this year, news on Friday that China has now officially overtaken Germany as the world's largest exporter also serves to highlight Europe's predicament.

Support from the Liberals

Despite the signs of opposition, the Spanish proposals appear to have the support of a number of important players in Brussels, including the new permanent president of the European Council, Herman Van Rompuy, and the leader of the Liberals in the European Parliament, Guy Verhofstadt.

Speaking in Madrid last Friday, Mr Van Rompuy, a former Belgian prime minister, showed his support for stricter controls.

"We need a stricter method of government and a better control of the process," said the permanent president, set to go into greater detail at the informal summit of EU leaders being convened at his request in February.

According to a letter sent to European Commission president Jose Manuel Barroso on Friday by Mr Verhofstadt, the Lisbon Strategy has "failed" due to "the lack of commitments from member states and the absence of mandatory instruments at the EU level."

Also a former Belgian prime minister, the Liberal leader added that the commission should be empowered to play a greater role in boosting the EU's economic growth, and that the EU's structural fund payments be used as a mechanism to promote the achievement of economic targets.

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The next few months will be decisive for the European Union's future economic health, with the bloc set to agree a new 10-year economic plan in a bid to leave the recent recession behind, and chart a fresh course towards steady growth and job creation.

Spain to push for binding EU economic goals

Spanish Prime Minister Jose Luis Rodriguez Zapatero has said the EU's new 10-year economic plan, set to be agreed over the coming months, should have binding goals and "corrective measures" for member states that do not comply.

Juncker calls for greater eurozone oversight

Eurozone chief Jean-Claude Juncker has called for better oversight of the 16-member currency area, with a greater role for the European Commission to reprimand countries for falling behind.

EU countries stuck on rule of law-budget link

Divisions among EU governments remain between those who want to suspend EU funds if rule of law is not respected, and those who want to narrow down conditionality.

MEPs warn of 'significant gaps' in budget talks

The budget committee chair said the European Parliament expects tangible improvements to the package in its talks with member states - while the German minister argued that the EU leaders' deal was difficult enough.

EU forecasts deeper recession, amid recovery funds row

The economies of France, Italy and Spain will contract more then 10-percent this year, according to the latest forecast by the EU executive, as it urges member state governments to strike a deal on the budget and recovery package.

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