Thursday

21st Sep 2017

Germany wants EU fund to enforce fiscal rules

  • Wolfgang Schaeuble: the European Commission has become too political to enforce EU rules (Photo: Tatra Summit)

Germany has said that “neutral” bodies, such as the European Stability Mechanism (ESM), should take over from the European Commission on implementing fiscal rules.

Speaking at the Tatra Summit, a conference organised by the Globsec think tank in Bratislava on Friday (28 October), German finance minister Wolfgang Schaeuble said that the commission was becoming too “political” to do the job right.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

“In some ways, the commission must move in the direction of becoming a European government, but when it’s a matter of implementing the rules we need some neutral institutions”, he said.

He said that, as a federalist, he would have preferred a full-blown fiscal union and joint eurozone government.

He said that, since there was no appetite for EU treaty change, the bloc should instead use existing instruments, such as the ESM, its financial emergency fund, to “repair” the way it works.

The commission has let France and Italy off the hook on budget deficits. It also decided last summer not to impose sanctions on Spain and Portugal.

It did it in part because France was heading into elections with the anti-EU National Front party posing a threat.

Italy was struggling with earthquake reconstruction and refugee costs, as well as a referendum that could catapult an anti-euro party, the 5 Star Movement, into power.

Commission head Jean-Claude Juncker recently also said that France got flexibility “because it’s France” - a remark which indicated that big EU states could break rules with impunity.

“That is a philosophy that doesn’t work for the European Union”, Schaeuble said on Friday.

Citing a remark by European Central Bank chief Mario Draghi, Schaeuble added: “If finance ministers don’t stick to the rules they’ve given themselves, where will trust come from in our currency?”.

Because it’s France

Pierre Moscovici, the EU finance commissioner and former French finance minister, defended Juncker’s comments at the Bratislava debate.

“Our president [Juncker] loves France. What he said was maybe just a sign of sympathy”, Moscovici said.

“There is no discrimination in the commission no matter what the colour of the country, its political family, or its size. We have just one compass - the rules”, he said.

He said the commission is “political” to the extent that it takes into account the specific situation in member states when deciding whether to impose sanctions.

He said events such as earthquakes, refugees, and national elections “should be taken into consideration”.

“I’m not very enthusiastic about that”, he said on Schaeuble’s ESM idea.

He said the ESM, or similar bodies, such as the European Systemic Risk Board, which were set up during the financial crisis, were “purely financial and technical” with “no democratic control”.

“No. I think this [fiscal monitoring] should still be in the commission”, he said.

He said the current set up works because, despite the commission’s flexibility, eurozone budget deficits fell from more than 6 percent in 2010 to some 2 percent today.

One of Moscovici’s advisors told EUobserver that Schaeuble’s ESM idea did not amount to a serious proposal at this stage.

“It’s not even an academic discussion. He [Schaeuble] just made a remark to press and the commissioner responded”, the aide said.

Jobs not concepts

The French and the Italian finance ministers, who also took part in Friday’s debate in the Slovak capital, backed the EU commissioner.

France’s Michel Sapin said that if the commission had thrown the book at France it could have given ammunition to the National Front.

He said the ESM approach would only work if fiscal rules were a matter of red or green lights, but that, in reality, “we often talk about flexibilities when we are somewhere between the red and green”.

Sapin added that the word “political” is all too often used negatively. “It is not [negative]. It’s about a very fine assessment of the situation and seeing how rules can be applied flexibly”, he said.

Italy’s Pier Carlo Padoan said average people are more interested in jobs than in abstract financial concepts.

“Most Europeans don’t know what 'banking union' or 'surplus product' are. They want jobs. They want to know if their kids will have jobs … We need more instruments that link financial stability and discipline to jobs and growth”, he said.

He said Italy should be rewarded for “doing a service to Europe” by policing its southern border and by taking care of asylum seekers coming from Libya.

“Of course the rules must be respected, but sometimes the rules are badly designed”, he said.

Schaeuble said to want to split EU commission powers

German finance minister Wolfgang Schaeuble would like the competition and single market departments removed from the European Commission, according to a report in Germany's leading centre-right daily.

EU 'finance ministry' pardons Italy and Spain

Italy, Portugal, and Spain are unlikely to face sanctions for breaking EU budget rules, the European Commission has said, in what it described as a “political” decision by a kind of “common finance ministry”.

Bank agency shuns EU invitations

The EU's banking agency is not visiting cities that want to host the agency post-Brexit "to ensure objectivity". The medicines agency has no such qualms.

Investigation

EU bank accused of muzzling watchdog

An ongoing review of the the European Investment Bank's "complaints mechanism" could make the oversight branch less independent and less effective.

Investigation

EU bank accused of muzzling watchdog

An ongoing review of the the European Investment Bank's "complaints mechanism" could make the oversight branch less independent and less effective.

News in Brief

  1. Le Pen's right-hand man leaves National Front
  2. Spanish PM calls on Catalan leaders to 'stop escalation'
  3. Dutch government to appeal Srebrenica ruling
  4. Verhofstadt: Northern Ireland could stay in single market
  5. Catalan leader decries Spanish government intervention
  6. Hungary set for fresh campaign against public enemy Soros
  7. Iceland's PM leads in polls ahead of October elections
  8. Erdogan demands Iraqi Kurds cancel referendum

Stakeholders' Highlights

  1. European Jewish CongressCommends the German Government for Adopting the Working Definition of Antisemitism
  2. EU2017EEFour Tax Initiatives to Modernise the EU's Tax System
  3. Dialogue PlatformResponsibility in Practice: Gulen & Islamic Thought
  4. Counter BalanceHuman Rights Concerns Over EIB Loan to the Trans Anatolian Pipeline Project
  5. Mission of China to the EUChina Leads the Global Clean Energy Transition
  6. CES - Silicones EuropeFrom Baking Moulds to Oven Mitts, Silicones Are a Key Ingredient in Kitchens
  7. Martens CentreFor a New Europeanism: How to Put the Motto "Unity in Diversity" Into Practice
  8. Access MBAGet Ahead With an MBA Degree. Top MBA Event in Brussels
  9. Idealist QuarterlyIdealist Quarterly Event: Building Fearless Democracies With Gerald Hensel
  10. Mission of China to the EUPresident Xi Urges Bigger Global Role for Emerging Economies
  11. EU2017EEAre We Socially Insured in the Future of Work?
  12. European Jewish CongressFrench Authorities to Root Out "Societal Antisemitism" After Jewish Family Assaulted

Stakeholders' Highlights

  1. European Federation of Local Energy CompaniesClean Energy for All? On 10.10 Top-Level Speakers Present the Clean Energy Package
  2. UNICEFUp to Three Quarters of Children Face Abuse & Exploitation on Mediterranean Migration Routes
  3. Swedish EnterprisesEurope Under Challenge; Recipe for a Competitive EU
  4. European Public Health AllianceCall to International Action to Break Deadlock on Chronic Diseases Crisis
  5. CES - Silicones EuropePropelling the construction revolution with silicones
  6. EU2017EEEU 2018 Budget: A Case of Three Paradoxes
  7. ACCAUS 'Dash for Gas' Could Disrupt Global Gas Markets
  8. Swedish Enterprises“No Time to Lose” Film & Debate on How Business & Politics Can Fight Climate Change
  9. European Free AllianceSave The Date!! 26.09 - Coppieters Awards To... Carme Forcadell
  10. European Jewish CongressEJC Expresses Grave Concern Over Rise in Antisemitism in Poland
  11. EU2017EECybersecurity and the Estonian Presidency
  12. European Free AllianceFemu a Corsica. A Corsican Nationalist Party With a European Dimension