Brokering a eurozone deal

– The Eurogroup must negotiate quickly on eurozone reform to be ready for action to shore up the single currency area by June, the new head of the finance ministers’ grouping said yesterday.

“We have to have clarity on the reform agenda by the time of the EU summit in March, so that we can deliver at the summit in June,” Portuguese finance chief Mario Centeno told German business daily Handelsblatt.

As the 19-nation currency area finally emerges from years of crisis, there is agreement in many eurozone capitals that it must be buttressed to better weather future economic storms – but not all countries agree on how best to do it.

Nevertheless, “we have an uncommonly favourable opportunity for reforms. Important EU countries have had elections and are entering new parliaments with fresh strength. The economy is growing in all countries and budget deficits are falling,” Centeno said.

“And despite all the controversies, support for European integration among citizens is high. We have to use this one-off chance,” he added.

The biggest arguments about how best to improve the eurozone see wealthier nations at odds with economically weaker ones.

Countries like Germany, the Netherlands or Finland fear their state coffers being raided to fill budget gaps for neighbours like Italy or Greece.

“Fears that there could end up being permanent transfers [from richer to poorer countries] are very understandable,” Centeno said.

But “completing the institutional architecture of the eurozone brings advantages for all member countries. Everyone has to understand that,” he insisted.

The politician is confident he can help broker a deal that would create a common budget for the eurozone, a European Monetary Fund, to lend to countries in crisis and a eurozone-wide bank deposit insurance scheme. –