The King is naked: Brussels wants to dress up euro so that next crisis will not take it ahead, but partners in north — Germany and Nerlands, toger with Austria and Finland — prefer to maintain status quo. In absence of market pressure, political will to make progress has been weakened, "admits Donald Tusk's sincerity in draft of his invitation to Euro Summit on 15 December. At that meeting, eurozone heads of state and Government, led by Chancellor Angela Merkel and French Emmanuel Macron, will discuss package of proposals that Brussels has put on table. The prospects are not promising: Berlin sends a lot in Europe, and does not seem to be for work.
Brussels has tried to combine European impulse of Macron with realism of Germany, to prescribe it of any measure that compels m to scratch ir pockets. The recovery is re: GDP grows by 2%, highest rate in 10 years, and unemployment has fallen to 8%. Internal risks have been mitigated, and challenges are rar external: geopolitical tensions, protectionism, a potential slowdown in China, or market jams due to interest rate hikes. Europe must have tools to handle potential shocks, Commission and Council agree. The problem is how to put bell in cat.
The two strength ideas of Brussels are already on table. The EU executive proposes to transform ESM into a monetary fund, and to create an anticrisis budget. The new FME would be built on structures of ESM, but would add to rescue programs to partners in difficulties (in exchange of harsh conditions) possibility of acting as firewalls for bank resolution fund: would allow bankruptcies without putting Financial stability is in jeopardy. It is about putting ESM, which has played a crucial role in crisis, within Community method, and subjecting it to control of Parliament to give it a democratic patina. That plan should be adopted in mid-2019. But Germany and Nerlands are adamant that ESM ceases to be an intergovernmental agency (controlled by euro countries), and would only agree to give it more power if it is also given a monitoring function on European economies that is now in M Years of Commission.
If FME is controversial, new anticrisis budget generates even less consensus. Brussels aims to create an instrument to combat asymmetric crises in a single country. But it does not specify its amount in face of reluctance of creditors to raise ir contribution to community coffers (1% of EU's GDP). It is a hodgepodge that combines instruments already created with new capacities without just fresh money. The most ambitious ideas, of entry, are discarded: possibility of a common unemployment insurance and a rainy day fund (a reserve fund for when a crisis appears) are for later.
Brussels opted for an investment protection mechanism to prevent countries from reducing that chapter when it enters a recession. And without this implying "permanent transfers", as he was responsible for reiterating Eurocomisario Pierre Moscovici to suspicions of Berlin. That would join a reform-support fund (already created), and a second fund to facilitate entry into euro of EU countries that are not yet part of it (also existing, but about 180 million to 300 million). Those 120 million are only new money that appears, at moment, in whole package: rest is based on pulling ESM. As central Europeans say, "The big lamps give little light."
"After years of crisis, it is time to put future of Europe in our hands: re is no better time to fix roof of a house than when sun shines," said head of Commission, Jean-Claude Juncker. The Eurocomisario Pierre Moscovici has argued that it is Commission, executive arm of EU, who must make "concrete proposals to shore up euro", in reference to criticism in Germany and or countries, which accuse Brussels of putting on table measures Too ambitious. It does not seem: package designed by Commission is more a halfway point between minimum that Paris can accept and maximum that Berlin can give. These are main proposals.
1. New FME. Brussels wants to transform ESM into a European Monetary Fund that can rescue countries with problems (in exchange for harsh conditions) and that serves as a firewall for fund of resolution, created to save banks. It is about putting ESM, which has played a leading role in exit of great Crisis, within Community method, respecting its current structure. Brussels notes that decision-making could be even faster, and that it would increase democratic control of European Parliament. The proposal should be adopted in Council and Parliament in mid-2019. But Berlin strongly opposes that ESM ceases to be an intergovernmental agency (this is, controlled by euro countries), and would only agree to give it more power if it is also given a function of vigilance on European economies that is now in hands of D (e) The Commission, according to sources consulted.
2. Pseudopresupuesto anticrisis. Brussels sets in motion new budgetary instruments to combat asymmetric crises, in one country, as this diary has anticipated. But it does not specify amount of this new instrument, given reluctance of creditors to scratch ir pockets. It is a hodgepodge that combines instruments already created with new capacities, but without money and cash in expectation of political negotiation. Most importantly, for time being, possibility of a common unemployment insurance and a rainy day fund (a reserve fund for when a crisis appears) is left, and Brussels opts for an investment protection mechanism : When a country enters a recession, first thing its government does is to cut public investment; The idea is that Brussels has a budgetary facility to allow it to keep that chapter stable. That joins a fund to support reforms (already created), and a second fund to facilitate entry into euro of EU countries that are not yet part of currency (already existing, but about 180 million to 300 million euros). In addition, Brussels will allow co-financing of projects with European funds to be reduced to countries with problems, as has been done with Greece in recent times. The Juncker team believes that se proposals could be adopted between 2018 and 2020, and leave investment protection mechanism for next budgets, 2021-2027.
3. Superminister. The European Commission intends to create a European minister of Economy and Finance, a sort of euro superminister who would be vice president of EU executive arm and president of Eurogroup. I would go to G-20 international meetings and IMF, and it would have as its main function to coordinate economic and fiscal policies of eurozone, one of greatest problems today. It would be for mid-2019.
4. Simplification of tax rules. The EU executive ARM intends to integrate into treaties myriad of regulations created to manage crisis, basically Fiscal Compact, approved by intergovernmental method (and not signed by two countries: United Kingdom and Czech Republic). That proposal should be approved by mid-2019. But it has encountered formidable resistance in Germany, which accuses Brussels — without any basis — of wanting to soften Stability and Growth Pact.