Monday

27th Sep 2021

Germany gets its way on reform 'contracts'

  • Merkel claimed to have a 'general commitment' for binding reform contracts (Photo: Council of European Union)

German Chancellor Angela Merkel on Friday (25 October) said fellow EU leaders during a summit in Brussels have "accepted the principle" of binding reform contracts that will transfer further sovereignty from a national level to the European Commission.

Merkel was cautious not to make "false promises" that a deal on this extra level of EU scrutiny will be achieved already in December, as details still need to be ironed out.

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

"But there is a clear commitment that we want to go beyond the current procedures in the European Semester," she said, in reference to current recommendations the European Commission is issuing for each country about their labour markets, pension systems and the like, but which are hardly ever implemented.

Merkel said the binding contracts would increase the level of "ownership" of reforms at national level, which tend to become sluggish once the economy picks up.

Leaders discussed this issue and the yet-to-be-established banking union on Thursday night for about two hours, one EU source told this website.

But the source was more sceptical than Merkel about the level of agreement on this German plan, as several leaders did not seem to understand what these contracts would be about.

A deal may be reached at the next EU summit in December, in return for Germany agreeing to the contested "single resolution mechanism" for failing banks.

Merkel has patented this tit-for-tat policy at EU level, also dubbed "salami tactics" in German media.

She agreed to the setting up of a eurozone bailout fund only when countries signed up to a "fiscal compact" enshrining a deficit ceiling in national constitutions.

She said Yes to banks being directly propped by this fund only when a single supervisor for eurozone's largest banks would be created.

Now, a fund for failing banks and ultimately more bills for taxpayers will only get the green light if countries sign up to these binding contracts.

A German official before the summit said Berlin would "continue our persuasion efforts with tenacity" and listed labour markets, efficiency of exports and innovation as parts of the economy that could come under this extra scrutiny.

The official noted that a recent study done by the European Central Bank showed that only ten percent of the commission's recommendations last year were transposed so far by member states.

"We have a clear problem with transposition and implementation in the field of economic coordination. Macro-economic imbalances also lead to situations where a country is forced to ask for financial assistance, raising the question if the current procedures are identifying the risks early enough. So the goal of this economic coordination has to be that aid requests become less probable," the official explained.

In the summit conclusions, leaders agree that "co-ordination of economic policies needs to be further strengthened, notably by increasing the level of commitment, ownership and implementation of economic policies and reforms in euro area member states, underpinned by strong democratic legitimacy and accountability at the level at which decisions are taken and implemented."

"To this end, it will already hold a discussion in December ... with the aim to agree, on the basis of the relevant indicators, on the main areas for coordination of economic policies and reforms," the text adds.

It lists precisely the areas mentioned by the German official: labour markets, efficiency of the public sector, research and innovation, adding education, employment and social inclusion.

"Work will be carried forward to strengthen economic policy coordination, with the objective of taking decisions in December on the main features of contractual arrangements and of associated solidarity mechanisms," according to the summit conclusions.

The contracts would engage all eurozone states, allowing non-euro members to participate voluntarily, as they did when signing up to the fiscal compact.

US spying to trump economy at EU summit

A meeting of EU leaders is likely to be diverted from its official agenda - innovation and eurozone integration - as the US spying scandal flares up in France and Germany.

Catalan MEPs lose immunity, slam 'political persecution'

Catalan separatist MEPs Carles Puigdemont, Toni Comín and Clara Ponsatí lost their parliamentary immunity - a result they have hailed as a "political victory" for bringing the conflict between Catalonia and Spain closer to the heart of Europe.

MEPs chide Portugal and Council in EU prosecutor dispute

The Belgian and Bulgarian prosecutors who were appointed had also not been the experts' first choice. Belgian prosecutor Jean-Michel Verelst has challenged the council's decision at the European Court of Justice.

Stakeholders' Highlights

  1. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  2. Nordic Council of MinistersCan you love whoever you want in care homes?
  3. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  4. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals
  5. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  6. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed

Latest News

  1. Scaling up tidal requires flood of new cash
  2. German coalition calculus dominates This WEEK
  3. No clear winner to succeed Merkel in Germany
  4. Banks fuelling expansion of oil-and-gas Arctic extraction
  5. The dilemma of Europe's returning female jihadis
  6. Why Draghi could be a two-term prime-minister
  7. Activists: 'More deaths' expected on Polish-Belarus border
  8. EU unveils common charger plan - forcing Apple redesign

Join EUobserver

Support quality EU news

Join us