Brussels, 11/12/2012 (Agence Europe) - The European Council will publish a roadmap and a timetable for strengthening the financial, budget, economic and policy arms of economic and monetary union (EMU) on Thursday 13 and Friday 14 December. The document will include the idea of contracts on national economic policies being signed with Europe and a special “fiscal capacity” for the eurozone, as set out in a working document by a group chaired by the president of the European Council, Herman Van Rompuy (see EUROPE 10746). Everything will depend on the extent to which heads of state manage to agree on details. In the short term, the prospects seem clear (banking union and greater integration of national economic policy), but in the longer-term (after the 2014 European elections), ideas are still vague.
Agreement this Wednesday on bank supervision would certainly lighten the atmosphere for the summit proper, said Cypriot European affairs minister Andreas Mavroyannis, adding that innovative ideas had been doing the rounds over lunch at the General Affairs Council on Tuesday, attended by Van Rompuy. The talks focused on relations between euro and non-euro countries; how the mooted fiscal capacity would mesh with EMU and the EU budget; and the democratic legitimacy of this process. On behalf of the European Commission, Maros Sefcovic said it was important to have a medium-term view of the future of Europe. At the end of next year, the Commission will unveil its vision of EMU which, it is hoped, will generate a wide debate during the European elections in 2014 so that the new European Parliament and the future Commission have a clear mandate for their EMU work.
The draft European Council conclusions document takes on board the three-stage process recommended by Van Rompuy. In 2013, substantial progress would be required on banking union and details of the eurozone bank supervision system under the aegis of the ECB and covering all 6,000 or so banks would need to be set up. Alongside that, inter-institutional talks on introducing a harmonised framework of national bank bailout schemes and savings guarantee systems would be needed, followed (still in 2013) by a common restructuring mechanism and the creation of a European body to this effect (separate from the ECB). Van Rompuy's suggestion that this new body should be part of the European Stability Mechanism (ESM) has not been included. The European Summit might ask the legislator to draw up an operational framework between now and March 2013 to allow the direct bailout of struggling banks by the eurozone bailout funds.
Under the twenty-five country Budget Pact, the Commission has until the end of 2013 to draw up rules to improve coordination in advance of big structural reforms to be carried out by the member states as part of the European Semester process.
Contracts. In the second stage, eurozone countries would be required to sign agreements with the Commission setting out their economic programme on paper. Their economic policies would have to fit in with the Commission's Annual Growth Forecasts (see EUROPE 10741) and be based on the country-specific recommendations endorsed by the European Council. Non-eurozone countries would be able to join this new system of contracts if they saw fit. The Commission will unveil draft legislation in 2013 so that the first contracts could be signed in 2014.
After the third stage of EMU starts in 2014, ideas are far less clear-cut: “The general objective of the third stage will be to aim for a progressive pooling of economic sovereignty at the European level as well as a reinforced solidarity between member states. This will take more time and may imply a change to the Treaties. This would take the form of a well-defined and limited fiscal capacity to improve the absorption of large country-specific economic shocks through an insurance system at the central level.' This fiscal capacity would make the eurozone as a whole more resistant to shocks and would supplement future economic policy agreements considered for the second phase.
MEPs are not impressed at the way the talks are going. In Strasbourg on Tuesday, France's Joseph Daul (EPP) said the markets, and citizens too, had to be shown that Europe was genuinely committed to bring about change. Slamming the lack of political will at the Council, Hannes Swoboda (S&D, Austria) said that European citizens are aware of the “dichotomy” between the festive atmosphere in Oslo at the Nobel Prize ceremony where the EU was given the Peace Prize, and the desire to have a vision of and for Europe. Guy Verhofstadt (ADLE, Belgium) asked why the summit was being held in the first place because it would not be taking a detailed look at the social and economic future of the EU or the EU budget. At most, it might talk about Banking Union for the third time in a row. He explained that coming after the documents from the Commission and Herman Van Rompuy, the summit conclusions document was wishy-washy and watered down, and did not resemble in any way what had been promised in June, namely a clear roadmap and a timetable. (MB and MD/transl.fl)