Brussels, 17/12/2012 (Agence Europe) - On Monday 17 December, MEPs welcomed the results of the European Summit last week vis-à-vis Banking Union, but said not enough had been done at the ECOFIN Council on eurozone banking supervision (see EUROPE 10752). The MEPs say the summit's conclusions document leaves a lot to be desired on the budget, economic and political aspects of boosting economic and monetary union (EMU).
Head of the EPP party at the European Parliament Joseph Daul, of France, said that the agreement in principle at the Summit on the bank supervision mechanism under the aegis of the ECB for the 6,000 or so banks in the eurozone is clearly a step forward, but that he was not fully satisfied. Recommending a coherent system, he warned against leaving loopholes that would leave some big banks not directly monitored by the ECB, adding that in the end, the regulation would apply to all banks across the eurozone. Speaking on behalf of the S&D party, Enrique Guerrero Salom of Spain regretted the lack of clarity about when the new system would come into place, a lack that would have a negative impact on the need to break the vicious circle whereby bank woes lead to public debt problems in Spain or Ireland. He said the Parliament had been more ambitious on the question of scope, but one had to start somewhere, although he regretted the deadlock at the Council of Ministers on the draft directive to change the rules governing deposit guarantee schemes. Pointing out that the Parliament had come up with the idea of a eurozone bank supervisor back in 2009, Guy Verhofstadt (ADLE, Belgium) raised a number of questions: - would the eurozone bank supervision system cover the whole of the single market? - what would be the benefit of joining for non-euro countries? - was the “Chinese Wall” that was planned to hive off monetary supervision from bank supervision at the ECB high enough? Derk Jan Eppink (CRE, Belgium) said the foundations of banking union were not stable because taxpayers in a country like Germany didn't want to pay for bank errors in other countries.
The chair of the European Council, Herman Van Rompuy, said that if the eurozone bank supervision system had been in place in 2008, then the financial crisis would not have been so severe. He said the political agreement among heads of state paved the way for a common system to share work in a common-sense manner and allow a good division of labour at the ECB. The President of the European Commission, José Manuel Barroso, said that in 2013, the European Commission would publish draft legislation to set up an EU bank restructuring authority once the legislation to harmonise national bank bailout and deposit guarantee systems had gone through.
EMU. The Council asked Rompuy to draw up measures by June next year, along with a roadmap and timetable, for the following areas: - prior coordination of national economic policies; - the social dimension of EMU, including social dialogue; - the feasibility of signed contracts between countries and the Commission on national reforms to boost competitiveness and growth; - financial incentives to help countries that have signed up to such contracts.
The MEPs were critical of European leaders' inability to make any progress in other areas of EMU. Guerrero Salom said that the EU was a “political project,” and he regretted the weakness of the social aspect because it meant the EU was an unidentifiable political object. Verhofstadt said the European Summit didn't really back the Commission's blueprint or Van Rompuy's roadmap (see EUROPE 10740 and 10746). He criticised Barroso, saying that when all options are open, it means that no decisions have been taken, and he regretted the fact that key areas had been ignored by the summit's conclusions document, debt pooling, for example, or the redemption fund idea and a treasury and fiscal capacity for the eurozone. He said the problem was that the ECB had reduced the pressure on governments in the short-term by means of its OMT (buy-up of sovereign debt). On behalf of the Greens/EFA party, Germany's Rebecca Harms recommended a partial pooling of sovereign debt and the appointment of a real European finance minister. Bastiaan Belder (ELD, the Netherlands) criticised Van Rompuy and Barroso's failure to admit that they'd made a mistake in setting up the euro. He said Nero had played the fiddle while Rome burned and that was what Barroso and Van Rompuy were doing too. Patrick Le Hyaric (GUE/NGL, France) said that the idea of countries signing contracts with Europe on economic policy would force them to cut back on social spending, cutting workers' rights and cutting pensions. He called for changes in the ECB's rules of operation to get it to work to boost job creation rather than simply look after the banks.
Van Rompuy reacted unambiguously to the criticism of the member states, saying that of course we have focused on the short term, and that some ideas were not right. He went on to say that we have looked not only at certain hard spots related to sovereignty, but also the sovereignty of the member states. He said that we have to dare to say that we are having an effect on extremely sensitive areas, and we have to move forward step by step. If there is no longer any pressure from the markets, we have to maintain the pressure of the institutions. He added that he is under no illusions that all of this was going to be done in the first fell swoop. He referred to the example of the ex ante coordination of the main economic reforms of the member states, for which the Commission will present a legislative proposal in 2013. Barroso echoed these sentiments. The European leaders could have made an agreement on a “more ambitious” trajectory, he said. He reiterated a number of elements which he sees as fundamental: - coupling discipline with solidarity; - including the process in the Community method.
On the competitiveness contracts to be negotiated by the Eurozone countries at European level, Van Rompuy admitted that he was “not certain” that the member states would apply at home the specific economic policy recommendations given to them by the European Council. He said that in order to involve all of the countries, the contract instrument takes priority. This instrument respects national competences whilst bringing pressure to bear to ensure that they commit to the path of convergence. They are not just contracts of discipline; they have a lot more wealth than people think. They have an aim and a positive orientation in terms of competitiveness, growth and employment.
Other MEPs spoke out against the shortcomings of the political plank designed to reinforce the democratic legitimacy of the EMU. According to the European leaders, this reinforcement will operate on the level at which decisions are made. We have to start by organising democratic control within the single supervision mechanism. This is our job, we have no instructions to give Van Rompuy said. (MB/transl.fl)