Deal on Euro budget ‘a new chapter’
But Merkel and Macron say detail to be agreed with other members
THE leaders of Germany and France agreed last night to create a budget for the eurozone and hailed a “new chapter” for the currency union, but they left the details to be worked out later with other members of the 19-country bloc.
Their meeting, to prepare for an EU summit on June 28-29, had been dubbed a “moment of truth” for bilateral relations by France’s finance minister, as Paris has pressed Berlin for months to agree reforms to crisis-proof the bloc.
After meeting at Chancellor Angela Merkel’s Meseberg retreat outside Berlin, she and French President Emmanuel Macron presented the new budget as a means of boosting the bloc’s economic competitiveness.
Mr Macron said it would be operational by 2021, but their plans lacked further detail.
“We are opening a new chapter,” Ms Merkel said after the talks, which produced an eight-page declaration entitled: ‘Renewing Europe’s promises of security and prosperity’.
Ms Merkel said the budget would be used to strengthen economic convergence within the eurozone, which was almost torn apart by a debt crisis that took hold in 2009.
“We know that an economic and monetary union can only remain intact if economic policies converge,” she said, adding that eurozone reform was the toughest issue in the talks, which also touched on European foreign and defence policy and immigration.
Mr Macron, who last September laid out a sweeping vision for eurozone reform, defended the agreement when pressed by journalists.
“It will be a real budget, with annual revenues and spending,” he said. “This is a political commitment we make together which will require technical work at the ministerial level by the end of the year, and then indispensable treaty change the year after.”
The two leaders had decided to focus on broad issues to leave more room for negotiations with the other 17 euro members, Mr Macron said – a scenario that leaves scope for the plans to be watered down.
National contributions and European resources would be used to fund the budget, the leaders said in the declaration.
Mr Macron said its size and details on its financing would be hammered out by ministers before the end of the year.
European Commission President Jean-Claude Juncker called the plans “very well balanced”.
“I am very pleased with the German-French paper. It allows European progress and the Commission is very pleased with what is being developed,” he said.
While Europe’s economy has picked up and there is no immediate sign of financial stress,
‘It will be a real budget, with annual revenues and spending’
many analysts say reforms are needed to protect the single currency.
Ms Merkel said she was optimistic her government and parliament would back the proposed reforms.
However, her political capital is being eroded by a row with her Bavarian allies, who have given the chancellor two weeks to find a European solution to their immigration dispute.
The row threatens to scupper Ms Merkel’s threemonth-old coalition and limits her capacity for agreeing to far-reaching eurozone reforms, of which many in her conservative bloc are sceptical.
Keen not to increase burdens on German taxpayers, Ms Merkel has indicated she would prefer a eurozone budget in the “tens of billions” rather than Mr Macron’s idea of hundreds of billions of euros for investments.
Noting in their declaration that “the EU faces existential challenges”, the leaders agreed to set up a European border police and to create a European asylum office. But they failed to deliver any big-bang reforms, and soft-pedalled on the idea of a European insurance scheme (EDIS) for bank deposits.
“Everything depends on the details that are not yet known,” Guntram Wolff, director of the Brussels-based think tank Bruegel, said of the reform plans.
“But without finishing the banking union, the euro area will remain fragile,” he said.
Meanwhile, Italy’s right-wing populist Interior Minister Matteo Salvini has prompted a new outcry by saying he wants a census of the Roma community that would lead to non-Italians being deported. After a chorus of criticism, he said his only aim was to protect Roma children.
Since Mr Salvini’s League party came to power this month with the anti-establishment Five Star movement, he has focused heavily on immigration. Last week he refused to allow a charity ship carrying 629 migrants into Italy.
Mr Salvini has tried to limit the number of migrants entering Italy by blocking charity ships that rescue people off the Libyan coast. The Aquarius eventually arrived in the Spanish port of Valencia at the weekend.
His remarks on Roma were eventually rebutted by his fellow deputy prime minister and leader of Five Star, Luigi di Maio, who made clear that a census was unconstitutional.