Parts of the German CDU party are highly critical of the joint reform plans proposed by their own Chancellor Angela Merkel and French President Emmanuel Macron. Her projects for the eurozone are the “wrong signal”, they say. EURACTIV Germany’s media partner “WirtschaftsWoche” reports.
A few days before the EU summit in Brussels, a strong headwind is blowing into German Chancellor Angela Merkel’s face from her own party’s business wing. The Merkel-Macron line agreed in their meeting last week on the matter of euro reforms is “the wrong signal to the states in crisis”, a statement by the “Economic Council of the CDU” suggests.
“Even if the implementation of many proposals remains unclear and the projects and their solution are pushed towards long timelines: It is clear that the direction is not right.”
Merkel and Macron in their “Meseberg Declaration” demanded measures to create a “genuine economic union”. Among other things, they spoke out in favour of creating an own budget for the eurozone states from tax revenues. It would then finance investments in low-growth countries to bring about an approximation of economic conditions.
However, the EU so far does not have tax competence of its own. It is also unclear how this budget should be limited to the eurozone countries, but at the same time be incorporated into the overall EU budget.
In addition, eurozone members should be able to obtain short-term loans on less stringent conditions from the ESM rescue fund. A further development of the “banking union” and the “capital markets union” had also been discussed in Meseberg.
“This gives reason to fear that yesterday foundations were laid for the EU to slip into an irreversible transfer and debt community, long after Merkel and Macron had claimed political responsibility. This is not the right signal for the new Italian government to finally clean up the bank balance sheets and purify the administrative apparatus, or Greece to do its homework,” said Wolfgang Steiger, secretary-general of the CDU Economic Council.
“We must not burden the future generations with more European money pots, in order to get approval for the migration policy,” Steiger told German Bild.de.
Instead, Steiger called for “firewalls” to be set in place.
“Europe needs a clear mechanism so that eurozone countries can restructure their debts in the event of a crisis. In addition, we urgently need to limit or protect the escalating TARGET2 balances, which rose by as much as €54 billion to nearly €1 trillion in May alone.”
TARGET2 is the real-time gross settlement system processing large value payments for the eurozone.
The TARGET2 system will finance capital flight from Italy, which threatens to become “an actual factor for Germany,” Steiger said.