Friday 23 March 2018

Germany and France step up push for EU control of budgets

GERMANY and France stepped up a drive yesterday for coercive new powers to monitor and reject eurozone members' budgets that breach EU rules.

Ahead of today's meeting of finance ministers in Brussels, the German minister responsible for Europe also reiterated his country's implacable opposition to any form of collective debt or euro bonds and support for further integration.

"Germany and the EU would be better off if we made a major step towards integration," Werner Hoyer told the Irish Independent.

Still, he ruled out any major changes to Europe's treaties for two or three years. Germany and France want a convention next March to agree limited changes, including more supervision of each member states' budgets, by the end of next year.

Mr Hoyer rejected tax harmonisation, but said countries may have to examine their tax base, which could force some countries such as Ireland, which have relatively low taxes, to make changes to the tax code.

Berlin and Paris aim to outline the extent of the convention that could pave the way for a fiscal union before a summit on December 9 -- increasingly seen as possibly the last chance to avert a breakdown of the single currency area.

Wolfgang Schäuble, German finance minister, rejected calls for the European Central Bank to act as a "lender of last resort" in the eurozone, and for the introduction of jointly guaranteed eurozone bonds to relieve the pressure on the most debt-strapped members of the common currency.

Germany was not big enough to support the rest of the eurozone on its own, Mr Schäuble told foreign correspondents in Berlin. The way to win back the confidence of the markets was to complete monetary union with a "stability union" based on strict budget discipline enshrined in EU treaties.

In a startling comment, Polish Foreign minister Radoslaw Sikorski declared that the biggest threat to his nation's security was "the collapse of the eurozone".

"I demand of Germany that, for your own sake and for ours, you help it survive and prosper," he said. "You know full well that nobody else can do it. I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity. You have become Europe's indispensable nation."

Germany wants automatic measures to prevent countries breaking the conditions set out in the growth and stability pact. Germany and France were the first countries to breach the pact but used political pressure to stop any fines.

"That's why we need automatic measures," Mr Hoyer said.

The leaders of two smaller eurozone countries, Finland and Luxembourg, voiced unease about the Franco-German plans because they appeared to bypass the European Commission, which is seen as a guarantor of equal treatment for all member states.

In France, Agriculture Minister Bruno Le Maire said eurozone countries would have to give up some budget sovereignty.

"We won't be able to save the euro if we don't accept that national budgets will have to be a bit more controlled than in the past," Le Maire told Europe 1 radio.

"We are in an economic war with a number of powerful speculators who have decided that the end of the euro is in their interest," he said.

Asked whether the Commission would be granted intrusive powers over national budgets in the eurozone, Le Maire said: "Why not? The French people have to realise what is at stake -- the preservation of our common currency and our sovereignty.

He acknowledged that France and Germany were still at odds over greater ECB intervention, but said: "We will have to find a compromise.'' (Additonal reporting Reuters)

Irish Independent

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