Schäuble urges big leap forward on ‘fiscal union’

Wolfgang Schauble Schaeuble smiling.jpg

German Finance Minister Wolfgang Schäuble has called for a great leap forward in European integration ahead of a summit of EU leaders, urging the creation of a new commissioner with power over budgets and reform of European Parliament decision-making.

Schäuble, a longtime advocate of closer EU integration who is not shy about voicing his personal views, said he had spoken with Chancellor Angela Merkel about his proposals and that she was "somewhat more cautious".

"We must now make bigger steps in the direction of a fiscal union," Schäuble told reporters on his way back from a trip to Asia. "We must use this chance."

He said a new "currency commissioner" should have the power to reject national budgets that were not in line with the euro zone's strict fiscal criteria, without specifying whether such a figure should have the power to impose penalties.

The model for the position would be the bloc's competition commissioner, who Schäuble said was "feared in the whole world".

He also called for more flexible voting arrangements in the European Parliament to accommodate closer integration between euro zone states.

European officials are looking for ways to boost the democratic legitimacy of their drive towards a closer union, but have run up against the dilemma that the European Parliament includes countries from outside the euro zone.

"In the European Parliament lawmakers only from countries directly affected by a given issue should vote on it," Schäuble said.

Such a reform would accelerate the trend towards a two-speed Europe, with the euro zone as an inner core.

Unease

Some of Schäuble's ideas are likely to stir unease even within the euro zone, where countries such as France are reluctant to surrender more sovereignty to EU institutions.

Weaker economies such as Greece, reeling from German-backed austerity programmes, will also be wary of entrenching the power of outsiders to run their financial affairs.

A previous proposal from Schäuble for a "Sparkommissar", or savings commissioner, was quietly dropped after it stirred fury in recession-mired Greece and got a cool reception from Germany's other European partners.

Undaunted, Schäuble said it was important to build momentum for greater fiscal and political integration, saying the bloc could launch a convention by December if it made good progress.

Merkel has previously said she would like the EU's December summit to agree a concrete date for the start of a convention.

The idea recalls the 100-plus strong gathering of EU lawmakers set up in 2001 – inspired  by the Philadelphia Convention that led to the adoption of the US federal constitution – charged with preparing a European charter.

The document that emerged was rejected by French and Dutch voters in 2005 and a watered down version ended up forming the basis of the EU's Lisbon Treaty, which is in force today.

Many member states, recalling the lengthy disputes and setbacks that preceded the Lisbon treaty's entry into force, are reluctant to embark on another process of institutional reform.

But Germany believes a much closer fiscal and political union is needed to ensure the success of painful economic reforms and the long-term survival of the euro currency.

"We need a lasting solution," Schäuble said.

German Chancellor Angela Merkel is in full agreement with Schäuble on his proposals for fiscal union in the euro area, a government spokesman said on Wednesday (17 October). "The chancellor and the finance minister are pulling in the same direction on this," said deputy government spokesman Georg Streiter at a regular government news conference, when asked about Schäuble's proposals

"A strengthened currency commissioner could stand for greater confidence in the implementation of measures and greater confidence in the euro zone itself," said a spokesman for Schäuble, Martin Kotthaus.

Kotthaus also said that Germany's opposition to euro bonds remains clear and has not changed. He said Germany is in favour of pan-European banking supervision "as soon as possible" but noted it is a very complex issue requiring careful preparation.

Jo Leinen, President of the European Movement International (EMI), said changes to the EU "treaty were inevitable" in order to achieve a full-fledged fiscal and economic union for the euro area. "In this respect, Mr. Schäuble's proposals to convene a new Convention can only be welcomed. The reforms should not be discussed behind closed doors, but have to be elaborated in a truly European debate,” Leinen demanded

German Chancellor Angela Merkel has insisted on achieving fiscal union in the eurozone – and centralised EU oversight over national budgets – as a necessary step to end the euro zone sovereign debt crisis.

Merkel hopes a summit of EU leaders in December can agree a concrete date for the start of a convention on a new treaty to achieve that.

Seen from Berlin, fiscal union is a prerequisite for considering any moves towards greater debt sharing – or Eurobonds – which French President François Hollande has been calling for persistently.

In the meantime, EU leaders at their October summit will look into 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.

  • 18-19 Oct.: EU summit to debate "interim report" on deepening integration in the Economic and Monetary Union.
  • 13-14 Dec.: Final report and roadmap for further economic and monetary union to be adopted by EU leaders at Brussels summit

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