Brussels, 19/10/2012 (Agence Europe) - On Friday 19 October, the European Summit gave the go-ahead for the president of the European Council, Herman Van Rompuy, to look into the feasibility of a “fiscal capacity” for the eurozone ahead of decisions in December on a roadmap on strengthening economic and monetary union (EMU). Van Rompuy said after the summit on Friday that he had been given clear instructions and could explore the idea of “fiscal capacity,” a new idea, and report back in December. He said that this feasibility study would not interfere at all with preparations for the EU's multiannual budget.
The idea of a budget for the eurozone was mooted by Germany and the European Central Bank and is included in the European Summit conclusions document, despite the reservations of countries like Austria (see EUROPE 10712). It has not met with universal approval a priori. On Thursday, the Dutch prime minister, Mark Rutte, said: “We have a lot of questions about separate budgets because there is already an EU budget.” The chancellor of Austria, Werner Faymann, said that there was no need for a budget for the eurozone.
The European Summit conclusions document makes no mention of the scale of any budget for the eurozone or what it would be used for. Berlin says it could provide a fund to help countries introduce the structural forms laid down in the budget and economic policy recommendations set out for them each year by the European Summit. France says it could be used to help countries facing country-specific economic crises, like the way the EU27 gives balance of payment aid to non-euro countries. Germany, France and Italy suggest the FTT should go into this new eurozone budget (see related article).
The Van Rompuy interim report goes further, calling for the setting up of a budget body with the ability to borrow money. Likewise for the creation of eurobills and a redemption fund. The German chancellor Angela Merkel repeats ad infinitum that the issuing of common debt is not appropriate while there are still national budgets. Germany rejects the ambitious budget solidarity plans put forward by Paris, but France has refused to comment to date on the German idea of giving the European Commission greater powers to interfere in national budgets. The subject was not on the summit's agenda, explained François Hollande.
Contracts. The EU27 have taken on board the German suggestion of the budget and economic recommendations to the member states made by the European summit being set out in the form of a contract. Signing a contract with the EU like this is described as a way of getting the political leaders at national level to take ownership of the recommendations without requiring any change in the treaties.
Van Rompuy said it will be crucial for the strengthened EMU to be fully legitimate and to be accountable, and that everyone agreed that democratic control must as a matter of policy take place at the level where decisions are made. (MB and EH/AN/transl.fl)