Analyst: The new EU treaty will be built by a vanguard

  

It is doubtful that all 27 EU members can agree to start treaty negotiations within the next few years. But a smaller vanguard of member states could agree on treaty changes which could be adopted by the other partners later on, Thomas Fischer from the Bertelsmann Stiftung told EurActiv in an exclusive interview.

 

Thomas Fischer is executive director of the Bertelsmann Stiftung’s Brussels office. He spoke to EurActiv Senior Editor Georgi Gotev.

Germany has been criticised for its opposition to eurobonds, ECB bond-buying, and its tough stance on Greece - among others. How much does the domestic agenda shape such positions? Is this a negotiating position from Germany or have past experiences discouraged Berlin from following a less self-interested, more pro-European agenda?

Quite a few critics of Germany’s position on eurobonds, ECB bond-buying and of its tough stance on Greece are blind in one eye. As regards the official position of the German Federal government, it does not generally deny access to European rescue packages for crisis-ridden EU members or completely exclude the introduction of eurobonds but insists on conditionality. That is to say that countries close to insolvency which need to be recapitalised – like Greece - are expected to make every effort to consolidate their public finances and to improve their international competitiveness. This exactly is what the Fiscal Compact initiated by Germany and signed by 25 EU members is about.

In more recent times, Chancellor [Angela] Merkel has repeatedly indicated that provided that there is a binding obligation to consolidate, she would also be ready to discuss instruments like eurobonds.

This do ut des ("I give that you might give") approach of the Merkel government is to a large extent determined by a domestic public and political debate which is framed by increasing sentiments against paying the bill for Europe and growing support – even within the current government coalition - for a “Grexit”. In addition, the idea that the ECB should follow the role model of the Bundesbank is deeply entrenched in Germany’s political culture. The experience of hyperinflation in the 1920s is still part of the collective memory of the Germans and it is exactly for that reason that they see preserving monetary stability as key task of the Bundesbank and the ECB – a public attitude which also explains to a certain extent the scepticism of Bundesbank President Jens Weidmann against ECB bond-buying. And last but not least, the German Constitutional Court’s recent jurisdiction further restricts the federal government’s room for manoeuvre by continuously strengthening the involvement of the German Bundestag in EU and eurozone affairs.

Due to these domestic constraints, the German federal government has to steer the course of conditionality. Being much more than just a negotiating position, the current German insistence should, however, not be interpreted as farewell to its traditionally pro-European agenda. Already under Ms Merkel’s predecessor, Chancellor Gerhard Schröder, the paradigm of European integration has changed in Germany. Europe is not primarily understood as political integration project any more, but as an economic project which has to pay off for all members states, including Germany.

Chancellor Merkel reportedly wants a new treaty for closer European political unification to help overcome the bloc's sovereign debt crisis. Merkel believes a much closer fiscal and political union - with EU oversight of national budgets - is needed to ensure that member states get their public finances fully in order and restore stability to the euro currency. And she has launched a campaign to persuade Germans of the benefits of European unity, as polls show rising euroscepticism in the continent's top economy amid the near three-year crisis. Is German public opinion favourable to more transfers of sovereignty to the European level? What about public opinion in other countries? Can they be convinced, only two years after the Lisbon Treaty came into force?

For sure, Chancellor Merkel is fully aware that a new treaty or another European Convention is no short-term solution to overcome the sovereign debt crisis and to strengthen the EU’s budgetary control powers. That she is increasingly taking into consideration this longer-term approach might also be explained by the ambitious goals of the quadriga report “Towards a Genuine Economic and Monetary Union” presented by President Van Rompuy at the last European Council at the end of June. Apart from the objective of a “banking union,” most of the goals outlined there will hardly be achievable without treaty changes – whether we talk about the “integrated budgetary framework” (including the introduction of eurobonds), the “integrated economic policy framework” or the “necessary democratic legitimacy and accountability of decision-making within EMU” which the report strives for.

Apparently, this argument is only addressing the legal feasibility of additional sovereignty transfers to the EU level – and does not provide any answers as concerns the political feasibility of such treaty changes. Having the rather painful experience of ratifying the Lisbon Treaty still in mind, there is little support for another European Convention from Germany’s partners. The United Kingdom will reject any attempts to change the treaties in a way that gives additional powers to the EU level. Poland will not accept any treaty revision that widens the gap between the eurozone and the non-eurozone members of the EU.

At the same time, recent surveys like the report “European Unity on the Rocks,” recently published by the US-based Pew Research Centre, show that public support for transferring additional powers to the EU is rather low. In six out of eight countries, the 2012 Pew study [shows] a majority of those interviewed oppose, for example, giving the European Union more authority over the national budgets of member countries. This applies to Britain (75%), Greece (75%), the Czech Republic (73%), Germany (56%), Spain (54%) and France (51%). The only exceptions are Poland and Italy where only 50%, respectively 40% indicated their opposition.

Having said this, it is currently rather doubtful that all 27 EU members can agree to re-start treaty negotiations within the next few years. At the same time, however, it remains to be seen how quickly public awareness raises that only the EU level is capable to efficiently tackle key challenges of the crisis. If more powers at the EU level should prove necessary simply for functional reasons, this could also trigger a debate about the question whether the current treaty revision procedures are sufficiently flexible. In this context, even the idea of a multispeed Europe might regain ground, which would allow a smaller vanguard of member states to agree on treaty changes which could be adopted by the other EU partners later on.

France's new socialist government has so far hesitated to follow Merkel's pro-European integrationist agenda, saying the focus should be on the short term and German taxpayer's "solidarity" with eurozone members. How realistic is it to envisage a "grand bargain" between France and Germany – i.e.: fiscal discipline and federal EU budget oversight in exchange for "solidarity"? In what timeframe?

I would not exclude that Germany and France will already close ranks again at the European Council meeting in December - when the roadmap for the quadriga report [Van Rompuy, Barroso, Juncker, Draghi] will be discussed. This prediction also appears justified since Moody’s, as one of the three leading credit rating agencies worldwide, has most recently warned that even Germany’s triple-A rating might be at stake - due to the euro crisis and its potential impact on German public finances. Since Germany and France are jointly bearing the main burden of the crisis and Europe’s rescue packages largely depend on the credit-worthiness of these two eurozone members, it is in the self-interest of France not to overstrain its neighbour’s fiscal capacities by pushing exclusively for short-term solidarity transfers financed by “the German taxpayer”.

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