Eu­ro­zone: Prob­lems first, in­sti­tu­tions later

The Daily Star (Lebanon) - - BUSINESS - By Jan Strupczewski and Francesco Guaras­cio

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

Their dis­cus­sions in the Es­to­nian cap­i­tal Tallinn fol­low dif­fer­ing pro­pos­als from France, Ger­many and the Euro­pean Com­mis­sion to re­vamp the in­sti­tu­tions of the 19coun­try eu­ro­zone after Bri­tain leaves the EU 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,” said Jeroen Di­js­sel­bloem, the chair­man of eu­ro­zone fi­nance min­is­ters.

“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 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 pan-Euro­pean 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 econ­omy and fi­nance min­is­ter 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.

There is also no agree­ment on whether all the changes to the eu­ro­zone should be ex­e­cuted through a sep­a­rate treaty be­tween govern­ments, or by chang­ing the Euro­pean Union treaty.

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