EU ministers to finalise watered-down eurozone reform plans
BRUSSELS, Dec 1, (RTRS): European Union finance ministers will seek final agreement on Monday on deeper eurozone integration which, after a year of negotiations, is likely to turn out much less ambitious than initially planned.
Championed by French President Emmanuel Macron, the reforms were meant to prepare the 19 euro countries for the next financial crisis and unite the EU around the single currency at a time of growing eurosceptic sentiment across the bloc.
But the talks ran into many difficulties: Germany did not have a proper government for almost six months, Italy elected a eurosceptic administration and the talks exposed fault lines between the north and the south and even between institutions.
Even though the integration plans concern only the eurozone, all of the EU’s finance ministers except Britain’s will discuss them on Monday because all might adopt the euro at some point in the future.
“It will be long, it will be intense,” one senior eurozone official involved in the preparations of the ministerial discussions said.
“It won’t be as high level (in terms of ambition) as some people expected a year ago, but we may exceed a little bit the low expectations right now,” he added.
The package agreed on Monday will then have to be endorsed by EU leaders on Dec 14.
The initial ideas included the creation of a large eurozone budget financed by dedicated taxes and national contributions, a euro zone finance minister in charge of it and a eurozone assembly in the European Parliament for democratic control.
The ESM eurozone bailout fund was to be transformed into a European Monetary Fund with wider powers of monitoring eurozone economies and a key role in a sovereign insolvency mechanism that would manage potential debt restructuring.
To break the doom-loop between governments and banks that buy large amounts of a single sovereign’s debt and then collapse as the sovereign becomes insolvent, there were to be limits on the concentration one country’s bonds in a bank’s portfolio.
The banking system was to be strengthened with a European Deposit Insurance Scheme (EDIS) that would guarantee deposits of up to 100,000 euros ($113,000) in any bank in any eurozone country.
Finally a eurozone bank resolution fund, created in 2014, was to get emergency loans from the ESM if ran out of money during a major banking crisis.
Only some of these ideas survived and many of those that did are a shadow of what they were when proposed in 2017.
There will be no eurozone caucus in the European Parliament and no finance minister. The eurozone budget, which France initially saw in the hundreds of billions of euros, may not have a set size at all.
“It’s gone from an elephant to a mouse. And the mouse is in a cage,” Dutch finance minister Wopke Hoekstra said about the budget, according to the Financieele Dagblad newspaper.