Tuesday

11th Aug 2020

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 20 years of archives. 14-day free trial.

... or subscribe 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.

Opinion

Why so few women in EU missions?

Angela Merkel is only the seventh woman to chair the Council of the European Union's meetings. And in 2020 there is no woman leading any of the current 11 European civilian missions (let alone the six military operations).

Commission chief under fire for Croatia campaign video

EU Commission president Ursula von der Leyen recorded a video in support of Croatia's ruling party, which the EU executive said was in her "personal capacity" - and admits it was a "mistake" that this was not made clear.

Stakeholders' Highlights

  1. UNESDANext generation Europe should be green and circular
  2. Nordic Council of MinistersNEW REPORT: Eight in ten people are concerned about climate change
  3. UNESDAHow reducing sugar and calories in soft drinks makes the healthier choice the easy choice
  4. Nordic Council of MinistersGreen energy to power Nordic start after Covid-19
  5. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  6. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis

Latest News

  1. EU looks on as Belarus protests turn lethal
  2. EU virus-alert agency says new restrictions needed
  3. Minsk violence prompts talk of EU sanctions
  4. Schrems privacy ruling risks EU's ties to digital world
  5. UK asks military to stop Channel migrants
  6. EU wary of violence in Belarus election
  7. Iraqis paid €2,000 each agree to leave Greece
  8. EU's most sustainable islands are Danish 'Sunshine Islands'

Join EUobserver

Support quality EU news

Join us