FRANCE, GERMANY PLAY UP EURO ZONE REFORM PLANS
>> PARIS: Chancellor Angela Merkel and President Emmanuel Macron talked up the prospect of agreeing reforms to the euro zone on Friday, saying they were committed to strengthening the single currency bloc and Europe as a whole.
Ms Merkel was in Paris for an evening of talks with Mr Macron, after the two agreed at a European Union summit last month to draw up joint plans for the euro area by March.
Mr Macron has talked in the past about the need for a standalone budget and a single finance minister for the currency bloc, but he played down any technical discussions on Friday, saying the priority was to agree on the end-goal first.
“If you begin by discussing the instruments without knowing what you want to do with them, there’s little chance of success,” he said. “That’s not how we in France have historically drawn up our budgets.”
The prospect of France and Germany, the economic and political drivers of Europe, agreeing reforms has risen on expectations Ms Merkel will soon clinch another grand coalition with the centre-left Social Democrats (SPD).
“Germany and France can and should take the lead on many questions (related to Europe) and therefore I understand that France is waiting that we have a new government,” said Ms Merkel.
Without agreement between the two, whose nations account for 50% of euro zone output, any ambition to upgrade Europe’s economic and monetary union and help the bloc withstand future crises is unlikely to get off the ground.
This year is seen as a critical but narrow window, with the European Parliament holding elections and Britain’s exit from the European Union reaching its deadline next year.
Yet while Mr Macron and Ms Merkel have met and spoken by phone repeatedly in recent weeks, there is some way to go before a common position on the core issues can be reached.
French Finance Minister Bruno Le Maire held talks with his German counterpart Peter Altmaier in Paris on Thursday, and said afterwards that an agreement may be difficult by March.
“We have … an immediate priority, which is the completion of the banking union, the completion of the capital markets union and tax convergence with Germany,” Mr Le Maire said.
“On these three issues, our goal is to reach a final joint position between March and June.”
Germany and France often put on a show of political unity when it comes to the euro zone, but the devil remains in the details.
Mr Macron, elected in May on an avowedly pro-Europe platform, has set out grand plans, including suggesting at one point that the zone should have its own budget worth hundreds of billions of euros, an idea that does not sit well with Germany.
Talk of some sort of budget for the 19-country bloc remains, but its size — if it is ever agreed — is likely to be much smaller and it remains unclear how it would be established.
The idea of a single finance minister now appears to be a discussion for the future, and the suggestion that the euro zone’s 500-billion-euro ESM rescue fund be turned into a European Monetary Fund to stabilise member states facing economic shocks still needs to be fleshed out.