GERMAN CHANCELLOR Angela Merkel’s coalition partners have signalled opposition to any ambitions to establish EU “economic governance” that includes oversight of national budgets.
Dr Merkel’s Bavarian allies, the Christian Social Union (CSU), have dismissed what they called the “plans to centralise” euro-zone economic policy in Brussels.
At December’s EU summit, leaders called for closer co-ordination of EU economic policy, seen as Berlin’s price for aiding distressed euro-zone partners. The question is whether this can be best achieved through existing structures or via a new agency.
“This is about strengthening economic political co-ordination at European level, for which no new bodies are required,” CSU politician Hans-Peter Friedrich told the Financial Times Deutschland.
German media reported before Christmas that EU member states, including Germany, were working on a plan for a European stability, growth and investment fund.
This independent agency would act in parallel with the European Central Bank to offer funds to countries in difficulty, in exchange for budget austerity measures. Germany’s finance ministry admitted it has prepared a paper with such a proposal, but finance minister Wolfgang Schäuble dismissed it as “not the official position of the ministry”.
Last March, Mr Schäuble called for a “European Monetary Fund” to buy sovereign bonds of distressed euro-zone members.
The debate over how best to crisis-proof the single currency through EU “economic governance” has been hobbled by widespread misunderstanding over what the term actually means.
For years the phrase has been a Franco-German political football, brought into play by Paris, only to be kicked out again by Berlin.
Last year Chancellor Merkel appeared to embrace the idea of economic governance, until it became clear she had co-opted the term to give it her own spin.
Rather than create a new institution with a secretariat, as envisaged by France, she suggested the existing European Council – where EU heads of state meet – could be given additional powers of economic oversight.
That has prompted frustrated French finance minister Christine Lagarde to demand measures so “every EU state has to take into account how its economic policies affect others”.
Ms Merkel’s coalition partners – the CSU and liberal Free Democrats (FDP) – have signalled opposition to this. They see French-style “economic governance” as an attempt to gain powers to throttle strong German exports, long a source of friction between Berlin and Paris.