Tuesday

12th Nov 2019

Van Rompuy paper floats eurozone budget, parliament

  • Van Rompuy is drafting a plan on deeper eurozone integration (Photo: European Council)

EU Council chief Van Rompuy on Wednesday (12 September) tabled an 'issues paper' on how to further integrate the eurozone, including a common budget, limited debt mutualisation and a parliamentary assembly.

The paper raises more questions than it answers. This is supposed to "get member states out of the closet on the most sensitive issues," one EU official told this website.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

Drafted with the heads of the EU commission, European Central Bank and Eurogroup of finance ministers, the paper proposes "a central budget for the euro area" in order to "deal with asymmetric shocks and help prevent contagion."

It also speaks of "limited common debt issuance." This should only occur "as long as the risk sharing is accompanied with commensurate steps towards common decision-making on budgets that safeguard against moral hazard" - wording that could have come straight out of Berlin.

The paper raises questions about the coordinated issuance of sovereign debt. "Could it include requiring approval for debt issuance beyond the limits defined in fiscal programmes or assigning such debt issuance a junior status?"

A more controversial idea for the 10 EU countries outside the eurozone is to have a parliamentary assembly formed exclusively of members from the 17 euro nations. The paper refers delicately to "dedicated accountability structures specific to the euro area" once there is more eurozone integration.

On the banking sector, Van Rompuy asks how the bailout fund will be used to directly recapitalise banks and whether it can also serve as a backstop to guarantee people's savings when a bank goes bust.

An EU summit on 18-19 October is set to endorse the parts of the paper which are doable without changing the EU treaties, while the more long-term goals of political union needing a convention, new treaty and referendums will be left for the December summit.

An attempt to deal with the German taboo of debt mutualisation and France's no-go area of further sovereignty transfers to Brussels was made in June when Van Rompuy first tabled a plan for deeper eurozone integration.

The only possible compromise at the time was to endorse common banking supervision in return for the German concession of granting troubled banks direct access to the eurozone bailout fund (ESM), a deal ultimately meant to help Spain lower its debt.

But as the crisis continues and markets doubt the results of each EU summit, more steps are needed towards further eurozone integration.

A senior eurozone official told this website in an interview earlier this month that the views of France and Germany are no longer so divergent.

"You will be surprised in the autumn by the degree of movement that will have taken place in some member states," said Thomas Wieser, who prepares the meetings of eurozone finance ministers.

Interview

France and Germany moving towards closer political union

"You will be surprised in the autumn by the degree of movement that will have taken place in some member states," says Thomas Wieser, one of the economists preparing plans for banking union ahead of the October EU summit.

EU budget hurdles mount

The EU is hoping for agreement on the next long-term budget by the end of the year but two opposing camps in the money negotiations remain about €100bn apart.

No eurozone-only assembly, say MEPs

MEPs have dismissed suggestions that a new parliamentary body should be set up solely for eurozone members stating that “no new accountability structures specific to the euro-area must be established.”

'Haiku Herman' quietly leaves EU stage

EU Council chief Van Rompuy is ending his five-year term true to his nature, with no glam or pomp. But his legacy is significant, particularly in the eurozone crisis and its institutional follow-up.

News in Brief

  1. Belgian asylum centre set on fire
  2. Xi Jingping in Athens promises new investment
  3. Farage's Brexit Party will not stand in Tory-held seats
  4. British founder of Syrian 'White Helmets' found dead
  5. Eight member states ask for EU aviation tax
  6. EU allocates €55m humanitarian aid to Sudan
  7. EU's climate contribution exceeds €20bn annually
  8. EU-Singapore trade deal enters into force this month

Column

These are the crunch issues for the 2019-2024 EU commission

These developments will largely determine who will be running the world in the coming decades and perhaps generations. If the Europeans can't find an answer over the five years, they will be toast. And we haven't even mentioned climate change.

EP president threatens MEP with sanctions over a tweet

The president of the European parliament, David Sassoli, has threatened the leader the leftist GUE/NGL group, Manon Aubry, over a tweet in which she encouraged the eco-activist group Extinction Rebellion to occupy the European parliament.

Stakeholders' Highlights

  1. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  2. Nordic Council of MinistersBrussels welcomes Nordic culture
  3. UNESDAUNESDA appoints Nicholas Hodac as Director General
  4. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  5. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  6. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  7. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  8. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  9. Nordic Council of MinistersNo evidence that social media are harmful to young people
  10. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  11. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  12. Nordic Council of MinistersEducation gets refugees into work

Latest News

  1. What does Macron really want on Western Balkans?
  2. Far-right Vox celebrates, as Spain left without majority
  3. EU 'climate bank' won't rule out carbon capture
  4. New hearings for the von der Leyen commission This WEEK
  5. Bosnia wants explanation for Macron's 'time-bomb' remark
  6. MEPs slam Commission over common charger delay
  7. Erdogan: refugees will enter Europe unless EU does more
  8. Cleaning up both the EU and Western Balkans

Join EUobserver

Support quality EU news

Join us