Saturday

17th Apr 2021

Minimalist EU summit hopes to calm markets

  • EU Council chamber: Fears over Spain could see the EU bail-out fund increased (Photo: Eurpoean Council)

European presidents and prime ministers descend upon Brussels on Thursday for their winter summit, where they hope to come up with a simple, elegant solution to tackle the eurozone crisis that rages around them.

The leaders will target in on what diplomats say is a very tight, clean, minimal change to the EU treaty to allow the creation of a permanent crisis mechanism to replace the current fund.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Diplomats have stripped down the agenda to this small treaty change and the bare outline of what the new permanent fund would look like, aiming to allow for maximum focus on the issue at hand and convince markets that they have dealt with the issue.

Ahead of the meeting, they were saying that it is crucial that leaders not get sidetracked by other issues or by tinkering too much with the wording of the treaty change.

If they exit the summit without the appearance of unity, the markets will pounce once again, though they appear to have calmed their ferocity when it comes to the debt situation of Portugal, Spain and Belgium in recent days after a maelstrom of attacks by the so-called bond vigilantes in November.

"We are hoping the prime ministers will not add any ‘decoration'," to the wording negotiated by diplomats, one EU source said. "There must be no surprises."

"There is just one objective: calm down the markets."

On Tuesday, Belgium had its sovereign debt outlook lowered by rating agency Standard & Poor's and Spain was warned on Wednesday by Moody' that its debt may be downgraded.

Unknowns ahead of the meeting include whether the leaders will back a boost to the size of the current temporary bail-out fund. Capped at 750 billion, some fear that it is not big enough to cover a rescue for Spain and have called for the sum to be increased.

Heading into the summit, the rotating presidency of the EU, currently held by Belgium, backed this idea, with Belgian finance minister Didier Reynders calling for a doubling of the fund.

Certain to come up but also certain to be slapped down by Germany and France will be Luxembourg's call for the EU to begin issuing bonds at the European level.

This week, Luxembourgish Prime Minister and chief of the eurozone group of states Jean-Claude Juncker and Italian finance minister Tremonti issued a call for such a move, only for the idea be brusquely dismissed by the bloc's two biggest powers.

Germany is worried that such a move would mingle its credit risk with that of weaker, peripheral European powers and increase the "moral hazard", allowing countries to get away with high public debts without paying the consequences.

However, Mr Juncker has said he intends to raise the issue nonetheless.

In an indication of the bitter wrangling behind the scenes, Mr Juncker this week also attacked Germany as "un-European" for opposing the idea of eurobonds.

Discussions on whether the new bail-out mechanism will involve simply loan guarantees or direct cash payments is off the table and will be discussed over the following three months.

Two other minor issues are also on the table: a progress report from the a Commission on the bloc'cs ‘2020 strategy', a plan to return the continent to growth; and Montenegro is expected to be offered the status of EU candidate country.

Luxembourg tax scandal may prompt EU action

An investigation into Luxembourg's tax regime has uncovered how the Italian mafia, the Russian underworld, and billionaires attempt to stash away their wealth. The European Commission has put itself on standby amid suggestions changes to EU law may be needed.

Investigation

Portugal vs Germany clash on EU corporate tax avoidance

Portugal's taking over the EU presidency puts the tax transparency law for corporations - which has been fought over for years - to a vote in the Council of Ministers. The resistance of the German government has failed.

News in Brief

  1. EU postpones decision on labelling gas 'sustainable'
  2. MEPs call for mass surveillance ban in EU public spaces
  3. Greek and Turkish ministers trade jibes in Ankara
  4. Biden repeats opposition to Russia-Germany pipeline
  5. Navalny in danger, letter warns EU foreign ministers
  6. Lithuania keen to use Denmark's AstraZeneca vaccines
  7. Gas plants largest source of power-sector emissions
  8. Study: Higher risk of blood clots from Covid than vaccines

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  2. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  3. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  4. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance
  5. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  6. Nordic Council of MinistersWomen benefit in the digitalised labour market

Latest News

  1. US rejects Slovenia-linked plan to break up Bosnia
  2. Ukraine urges Borrell to visit Russia front line
  3. Could US sanctions hit Russia vaccine sales to EU?
  4. Polish court pushes out critical ombudsman
  5. Political crises in Romania and Bulgaria amid third wave
  6. Von der Leyen's summer plans undisclosed, after Ukraine snub
  7. Over a million EU citizens back farm-animal cage ban
  8. Three options for West on Putin's Ukraine build-up

Join EUobserver

Support quality EU news

Join us