EU leaders put EMU reform on the backburner

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European Union leaders have postponed a deeper discussion of the future of the eurozone until December because of divergent views in the biggest countries and because of the more pressing migration issue, diplomats said.

EU leaders, who meet today (15 October) in Brussels, were to talk about fleshing out a report on the future of the Economic and Monetary Union (EMU) prepared by the 28-nation bloc’s top five officials in June – the so-called five presidents’ report – as the Greek debt crisis was shaking the euro zone’s foundations.

>> Read: EU’s ‘Five Presidents’ lay out eurozone vision, with timetable

“There will be a short report on EMU, but … there is no readiness for and no reform consensus between Germany and France,” one senior EU official said.

“We have not had such divergent views for a long time, so it would be very dangerous now if this discussion was opened, because it would reveal all the differences,” the official said.

Draft conclusions for the summit refer only to “taking stock of discussions” on the report and note that leaders will return to the issue at a summit in December.

Officials said that while both Germany and France wanted a stronger eurozone, the Germans were more focused on how to enforce existing EU rules while the French are more focused on how to distribute money from a future euro zone budget, called a “fiscal capacity”.

Paris and Berlin also had different concepts of sovereignty, officials said.

Officials said that with a full-blown migration crisis on their hands, the chairman of EU leaders Donald Tusk wanted to focus on one contentious issue at a time, leaving eurozone integration plans for later.

Scheduling such discussions for December was all the more justified as they were to be based on ideas from the European Commission which would take forward some aspects of the June report.

They will also concern mainly the next two years of evolution of the single currency area now which now has 19 members, not least because Britain is to decide in a referendum over the next two years whether to stay in the EU or leave.

Longer-term eurozone integration ideas, which could leave Britain marginalised, could influence the plebiscite, officials said, and where therefore best left for later.

Draft conclusions of the EU summit say only that the leaders will “take stock of the discussions on the Presidents’ report” and call for work to intensify, especially on completing the banking union.

Under the banking union project eurozone banks are now under a single supervisor and there is a common way of resolving banks that failed and paying for it.

The last element of the banking union, a joint EU deposit guarantee scheme, however, is highly controversial as Germany is strongly opposing ideas under which money to guarantee German savers’ deposits could be used to rescue savers elsewhere.

“The European Council will revert to these issues at its December meeting,” the draft conclusions of the summit said.

A diplomat said that EMU appeared on the summit agenda only for “procedural reasons” and that no discussion was expected. The issue will be wrapped up before the dinner, when the external dimension of the migration crisis will be discussed.

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