France, Germany kick plans for deeper union into the long grass

Merkel Hollande Elysee 30 May 2013.JPG

Paris and Berlin have delayed plans for deepening the economic and monetary union until after next year’s European elections, following talks in Paris between German Chancellor Angela Merkel and French President François Hollande on the future of the eurozone.

The heads of the core two eurozone nations met on 30 May to discuss proposals to strengthen the eurozone as it emerges from the worst of a three-year sovereign debt crisis which threatened the collapse of the bloc’s single currency.

European ministers will flesh out common proposals for a deeper economic and monetary union (EMU) ahead of an EU summit scheduled for 28 June.

The two heads of government had committed to coming up with proposals on 22 January, on the anniversary of the Élysée Treaty, which 50 years ago paved the way for closer cooperation between the two countries on matters of foreign policy.

While in Paris Merkel and Hollande reaffirmed this commitment but the two appeared to kick plans for stronger eurozone governance into the long grass, focusing instead on short-term eurozone stability measures.

“The efforts undertaken by member states to continue growth friendly fiscal consolidation stabilise the eurozone, preserve its integrity and thus restore confidence in the future of EMU,” Merkel and Hollande said in a joint statement. “The deepening of the EMU should be implemented while ensuring at every stage and at every level the democratic nature of decisions and the effectiveness of procedures.”

“France and Germany propose to strengthen the governance of the euro area after the next European elections with the beginning of the next terms office of the presidents of the European institutions.” In short, a deeper EMU will not come straight away.

‘After the next European elections’

The governments list a number of possible measures for post-2014 on stronger eurozone governance. These include:

  • More regular eurozone summits, a full-time president of the eurogroup of finance ministers and summits just for the eurozone ministers in areas such as employment or social affairs, research, and economic policy.
  • A separate eurozone parliament "to ensure adequate democratic control and legitimacy of European decision-making".
  • A greater role for European social partners, including employment organisations and trade unions, and possible social summits.

But unlike in France, a deeper eurozone EMU is a controversial subject for Germans, who are wary that it could lead to a “two-speed” Europe that separates the 17-nation bloc from the rest of the union. Germany is deeply attached to the single market but fears becoming a “eurozone treasury” for the rest of bloc, should it run into further debt problems.

Merkel may believe in fiscal cooperation and a federal union of sorts as a cure to the eurozone’s economic woes. But the task of creating one will fall on the shoulders of the next leaders of the eurozone, and well after the German elections in September this year.

At a summit in October, EU leaders were presented with an interim report by European Council President Herman Van Rompuy, which charts a path towards closer fiscal integration among the 17 countries using the euro.

The interim report followed an earlier draft that Van Rompuy tabled jointly with European Commission President José Manuel Barroso, Eurogroup then-President Jean-Claude Juncker and European Central BankPresident Mario Draghi – the so-called "four presidents".

The most far-reaching suggestions in the report included:

  • Setting "upper limits" on member states' annual budgets;
  • "Prior approval" for issuing government;
  • debt "beyond the level agreed in common";
  • Issuance of "common debt" as a medium term option;
  • Setting up an EU "treasury office";
  • Closer coordination on "labour mobility" and "tax coordination".
  • 28 June: EU summit to flesh out proposals for a deeper economic and monetary union
  • 22 Sept. 2013: German federal elections
  • 22-25 May 2014: European Parliament elections

French government


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