Eurozone integration plans delayed by Grexit and Brexit threats

The urgency of the Greek crisis and the sensitivity of the UK to issues of eurozone integration have complicated the last-minute negotiations over the “five presidents’ report” on eurozone governance. Initially promised for earlier this month, the report will now be presented in late June. EURACTIV France reports. 

The final version of the “five presidents’ report”, a leaked draft of which was published on EURACTIV, was due to be presented on 16 June.

>> Read: Leaked eurozone blueprint makes timid call for integration

But European Commission President Jean-Claude Juncker made the surprise last-minute announcement that the College of Commissioners would be asked to ratify the text on 24 June, as the five authors could not agree on its content.

This move was not met with unanimous approval. “It’s not very smart to present a text for ratification the day before a European Council. The 28 countries will not have the time to absorb it,” said a source from the Council of the EU.

The European Parliament had also hoped to see the document published sooner, to give time for a debate.

Gathering support for a deeper EMU

The situation in the Economic and Monetary Union (EMU) is becoming urgent, with the immediate risk of a Greek exit from the eurozone and the uncertainty surrounding the British referendum on EU membership, due to take place by the end of 2017.

An optimistic source close to the French President said “It would be good if the College of Commissioners supported the report”.

While the European Parliament’s contribution to the analysis of EMU governance touches on the issues of debt and the Troika, the five presidents’ report avoids the subjects.

“The question of the analysis and our next steps is politically divisive,” said Pervenche Berès, a French Socialist MEP who is rapporteur for the European Parliament’s contribution to the debate. She struggled to find common ground within the assembly, claiming that centre-right and conservative parties resisted the inclusion of terms like “convergence” or “social cohesion” in the text.

Another French source said, “The delicate issue with this report is for the presidents to explain that they are not dealing explicitly with the Greek or British problems, but that they are finding solutions for the future governance of the EMU”.

Paris and Berlin at the helm

France and Germany showed their determination to lead the eurozone by initiating the report, and have so far shown the greatest motivation to deepen the EMU.

“But we aim to create a movement, not a French-German executive,” a French source said.

This approach has worried European federalists, who would prefer to see the debate giving an equal voice to all 19 eurozone members.

The British problem

Discussions over greater eurozone integration might also raise tensions between the United Kingdom and the EU.

In Paris, London is not perceived as being particularly opposed to increased eurozone integration, as long as it does not feel that its position is under threat. A fully integrated eurozone could become a serious competitor to London in the financial services sector, and the UK may try to obstruct negotiations if it does not get its way.

One benefit the report could bring is to clarify the objectives of EU member states. “There is a gap between the discourse and the reality in the EU today. The treaty says that the states all have the same objectives within the EU, but this is not true. So we must find the right way to express them,” sources told EURACTIV.

Last year, the EU heads of states adopted their strategic agenda for the next institutional cycle, which reflects precisely this issue.

The influence of UK leader David Cameron is clearly visible in the text, which states that “the concept of ever closer union allows for different paths of integration for different countries, allowing those that want to deepen integration to move ahead, while respecting the wish of those who do not want to deepen any further.”

A more ambitious Parliament

Though it may reflect a compromise between the centre-left S&D and centre-right EPP groups in the European Parliament, the Berès report is more ambitious than that proposed by the five presidents.

“We have made progress on some subjects: the nature of the structural reforms, the criteria for analysing these reforms, and the fact that the president of the Eurogroup should come to the European Parliament to discuss the Eurogroup’s decisions. This is significant,” Berès said.

But the Liberal ALDE and Green groups rejected the report. They believe the text is too restrained on some subjects, like transfer budgets.

The report by Pervenche Berès, adopted by the Economic Affairs committee on 16 June, will be put to the vote in the European Parliament plenary session on 24 June.