Nail eurozone problems first, fix institutions later: finmins

Proposals from France, Germany and EC differ

TALLINN, Sept 16, (RTRS): The eurozone must identify its problems, then see what changes to its institutions are needed to fix them, eurozone finance ministers said on Friday.

Their discussions in the Estonian capital of Tallinn follow differing proposals from France, Germany and the European Commission to revamp the institutions of the 19-country eurozone after Britain leaves the European Union in March 2019.

The proposals include creating a pan-EU or eurozone finance minister, setting up a separate eurozone budget or reserving a part of the existing EU budget for the currency union, and setting up a eurozone parliament alongside or within the existing EU parliament of all 28 EU members.

“I think we should start from what the problem is and end with an institutional debate,” Jeroen Dijsselbloem, the chairman of eurozone finance ministers, said.

“Instead of having a debate mainly about the institutional side, (we should have) a debate about what is lacking in the economic and monetary union, in terms of resilience, competitiveness, solidarity,” he said. The European Commission on Wednesday called for a pan-European finance minister in charge of all forms of EU or eurozone financing via the EU budget, not just for the eurozone.

In the Commission’s view, the panEuropean minister should also preside over the eurozone bailout fund ESM, which is now a separate institution set up by eurozone governments. The ESM itself would be transformed into a European Monetary Fund.

But the job of such a European Minister of Economy and Finance would not be created before 2025, Commission Vice-President Valdis Dombrovskis told a news conference in Tallinn.

The Commission does not want a special eurozone parliament, however, stressing the need for unity among the 27 countries that will remain in the EU after Britain leaves. It called for the countries still outside the eurozone to join quickly.

France has a different view, however. It wants a large, separate eurozone budget financed from a special tax, a finance minister specifically for the eurozone and a separate eurozone parliament to which the minister would be accountable.

German Chancellor Angela Merkel appeared to support the Commission’s idea of a pan-European finance minister, but noted the terms used were still undefined and said she did not see big differences between the Commission and French ideas.

She also backed financial support for EU countries that implement reforms — one of the possible uses of the eurozone budget — but shunned the French idea of financing this with a special tax.

“I don’t see for the moment a convincing case for a European tax,” she said.

Nor is there agreement on whether all the changes to the eurozone should be done through a separate treaty between governments, or by changing the European Union treaty.

The difference is more than just a technicality, because an intergovernmental treaty would be faster, involve only eurozone governments and leave all powers with these governments.

Changes through the EU treaty would require more time and mean non-eurozone countries and the European Parliament would have to agree, too. The powers of the new eurozone institutions would be shared with EU institutions, which are sometimes mistrusted by some national governments.

French President Emmanuel Macron is to present his views on the future shape of the eurozone on Sept 26.