Merkel blowing smoke on reform proposals, says former German MEP

German Chancellor Angela Merkel (R) and Frances President Emmanuel Macron (L) speak during the G7 summit in Charlevoix in Canada 09 June 2018. [EPA-EFE/NEIL HALL]

With proposals for a European Monetary Fund and an investment budget for the eurozone, Chancellor Angela Merkel only tentatively moves closer to French President Emmanuel Macron. But her reform proposals do not go far enough, German MP Franziska Brantner told EURACTIV Germany in an interview.

Franziska Brantner is a German politician of the Green Party. She was a member of the European Parliament from 2009 to 2013.

She spoke to EURACTIV Germany”s Steffen Stierle.

Chancellor Merkel now supports the European Monetary Fund (EMF). In contrast to the Commission, however, she wants an intergovernmental solution instead of anchoring it into EU law. In addition, a backstop for the banking union is meant to be omitted in her model. Could that be a sustainable compromise?

We consider the intergovernmental approach to be inappropriate. The German coalition agreement clearly provides for an EMF within the institutional framework of the EU. The Commission has submitted a corresponding proposal. Legally, nothing stands in the way, one expert explained on Monday during the hearing in the European Committee. Therefore, there is no argument for us to find a solution outside EU law, given that there would be less democratic control and transparency in this case.

The second point is the content. Ultimately, the decisive factors are the conditions on which the loan is tied and who checks it in the end. We warn against putting the review completely in the hands of the ESM. This competence should remain within the Commission, if only because the ESM is not under parliamentary control and therefore not sufficiently democratically legitimized.

Merkel open to EU migration reform, cautious on eurozone

German Chancellor Angela Merkel said Sunday (10 June) she was more open to French President Emmanuel Macron’s plans to reform migration and defence policy in Europe than his hopes to bolster the euro.

Your colleagues in Brussels would argue that it is precisely the intergovernmental solution that is more democratic because it leaves room for national parliaments to stay in the game.

Even if there is a solution in EU law, the national parliaments would not be left out. Of course, in this case, the German Bundestag would continue to agree to the credit lines. At least, that is what is foreseen in the Commission’s proposal, which even includes strengthening national parliaments, namely the information rights vis-à-vis the monetary fund. In this respect, with its approach, the CDU deprives itself of its own control options.

The Chancellor has also taken up Macron’s euro budget idea, in the form of an investment budget, although it is meant to be comparatively small. Merkel wants it to be of “low double-digit billion range”. Will this be able to stabilise the eurozone in the end?

No, that’s a red herring. Presumably, one wants to give Macron a face-saving withdrawal option. But we all know that such a small budget would hardly help. Such a small amount also raises the question of where the difference would be to the normal EU budget, which is also meant to have an investment effect. Many questions arise. It is particularly important to us that the concept of European investment is well linked to the Multiannual Financial Framework (MFF).

With the MFF, the Commission wants to create a new money pot whose ultimate goal is to “buy” reforms in the member states. Is this a reasonable approach to achieve more homogenous economic structures?

Yes, that makes sense. We have been calling for such a mechanism for a long time, for countries to get financial support for structural reforms. A concrete example of where it could be put to good use is would be the introduction of a dual training system – a system that has proved its worth, but whose introduction is costly because it requires the appropriate vocational schools. To financially support this reform then makes perfect sense. The corresponding Commission proposal has been taken up by both Macron and Merkel.

Window of opportunity for EU reform might shrink soon, experts suggest

As the European Union finds itself at a crossroads and Brussels looks forward to a decisive Council summit at the end of the month, a recent report entitled “Re-energise Europe” calls on EU leaders to overcome divisions and implement reforms.

However, one should not pretend that our initial question is thus obsolete. As good as reform support is, in times of macroeconomic shocks it does not help. It also does not reduce macroeconomic imbalances.

In addition, the Commission is proposing a stabilisation function. You have to consider that as a complete package. Is the approach going in the right direction?

We have always welcomed the Juncker proposals as such. However, there are also question marks appearing. I doubt that credit lines are really the best approach or that they are sufficient. Macron’s approach to jointly finance joint tasks convinces me more. This includes common tax policies such as the CO2 tax, the plastic tax or corporate tax harmonization. Thus, one would de facto stabilize both, the revenue and the expenditure side.

This would also make it clearer that it is about transfers from one country to another, but about the joint financing of common tasks, such as a European border control or the European energy transition.

There are many suggestions, but how realistic is it in the current contentious situation to agree on reforms at all? This question also arises as a consequence of the new EU-critical government in Italy.

I think Merkel makes the right comments when she says that you have to negotiate openly and honestly with Italy. Only the openness is not yet visible. In my estimation, the Italian government is not very committed. Much depends on whether Paris and Berlin will strike the right tone.

By the way, next week, I am going to Italy to get a better idea of where the government actually stands. We all still have a lot of question marks. The Italian side also has some critical questions. This should be handled objectively. I do not think it is out of the question that we can develop the eurozone together with Italy in the near future.

France tells Germany ‘it’s now or never’ to save the EU

France called today (8 June) for more ambition from Germany in reforming the euro zone, saying Europe faced a “now or never” moment with rising external threats from the United States and China.

Moreover, we also have a new head of government in Spain. Pedro Sanchez is open to French President Emmanuel Macron’s proposals. Of course, you have to see if the collaboration with Podemos works and if he gets a necessary government majority. But in any case, there is a positive development here.

Ultimately, you cannot always wait until the situations is particularly favourable everywhere. Otherwise you never get reforms. By waiting and hesitating, the conditions are rather unfavourable, because the populists are strengthened by it. Instead, the democrats have to cut the ground from under their feet by giving convincing answers.

Don’t you think Germany should also contribute to that? The Commission has been calling for more investment and higher wages for years to reduce the export surplus. However, Germany has one of the worst implementation rates in the EU when it comes to Commission recommendations.

That is perfectly right, so we are asking the government to stick to the recommendations. This also applies to other topics, such as equal pay between the sexes.

The German government can afford to deal with these recommendations because of the European Semester has hardly any binding character, while the adjustment programs in the deficit countries are designed as really sharp swords. Isn’t that a problem?

Yes. We have always said that the requirements of the European Semester should be more binding for all. In the long run, it will not work to point a finger at others while doing nothing yourself.

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