In Strasbourg on Wednesday 7 February, the EPP group at the European Parliament is to adopt the position it will defend in the reflection on the deepening of Economic and Monetary Union (EMU).
This reflection, to be steered by France’s Françoise Grossetête, aims to learn lessons from the sovereign debt crisis and take position on the main subjects on the table, such as the creation of a fiscal capacity for the Eurozone, the creation of the European Monetary Fund (EMF) within the Community scope and the merger of the positions of Economic and Financial Affairs Commissioner and President of the Eurogroup (see EUROPE 11920).
“The common thread of the discussions is seeking a balance between risk-sharing and responsibility”, said an expert close to the dossier. He made no attempt to hide the fact that there are different sensitivities within this group with, schematically, MEPs from the Nordic countries calling for responsibility and those of the South laying emphasis on the sharing of risks.
The inter-group debate covered matters such as the pace at which banking union in the Eurozone should be finalised. The wording decided upon indicates that a European deposit insurance system (EDIS) should be created once the conditions are met, with certain delegations in favour of tougher language, stating that until the financial risks have been reduced, banking union may not be completed.
The Christian Democrats are calling for investment in Europe to be stimulated, through an even more ambitious post-2020 ‘Juncker’ plan and a better-targeted EU budget, according to a preparatory document of which EUROPE has had sight.
Fiscal capacity. A fiscal capacity for the Eurozone should be created, according to the EPP group, which considers that this capacity should be integrated in the future EU budget, but below the current ceilings. This clarification on the ceilings implies that it will be new money, according to the same source. This budgetary line will be used to preserve investment in the event of crisis, accompany structural reforms and support the efforts at convergence on the part of countries wishing to join the Eurozone.
Any financial assistance from this fiscal capacity will be conditional on meeting strict criteria, such as compliance with the Stability and Growth Pact and setting in place the country-by-country socio-economic policy recommendations. The EPP group, which calls for budgetary discipline, intends to hunt down government debt, for instance by introducing an insolvency mechanism for the Eurozone countries.
EMF. The Christian Democrats argue that the European Stability Mechanism (ESM), the permanent bailout fund of the Eurozone, should be converted into a European Monetary Fund (EMF), and brought within the Community fold. Unlike the ‘Eurozone’ budgetary line, this would come to the assistance of insolvent countries, but could support a solvent country implementing the necessary structural reforms.
The future EMF could also accompany a government debt restructuring process. This idea, which was put forward by the former German finance minister, Wolfgang Schäuble, has come up against stiff opposition from France (see EUROPE 11880).
Still to be debated by the EPP group are the procedure to appoint the director of the future EMF and how its actions will be controlled European level.
In order to reinforce the democratic legitimacy of the Eurozone, the EPP group is in favour of an increased role for the European Parliament, whilst rejecting the idea of creating a specific Eurozone parliament. A ‘Mr/Ms euro’ would help to put a face to the governance of the single currency and the Christian Democrats argue that such a person should be a Vice-President of the European Commission and, therefore, manage the future dedicated fiscal capacity.
At this stage, however, the EPP group has not discussed the possibility that this person would also chair the Eurogroup. (Original version in French by Mathieu Bion)