EU SUMMIT:CHANCELLOR ANGELA Merkel has said further European reform and integration efforts are "indispensable" for a stable euro, calling on leaders to agree by December a rebalancing of national and EU oversight of budgetary affairs.
Before yesterday’s EU summit, the German leader said that a European banking regulator – in Berlin’s eyes a precondition to Irish bank debt relief – was important to get right and that “quality has to go before speed”.
Only when it was up and running effectively could the ESM bailout “one day” recapitalise European banks, she said.
The German leader said she was similar unflustered by demands from EU neighbours to rush down what she termed the “wrong economic road” of shared European liability without adequate control mechanisms.
Instead she backed the call from her finance minister, Wolfgang Schäuble, for an EU currency commissioner with added powers to veto national budgets that breach EU fiscal rules. In a nod towards Paris, Dr Merkel said she was “astonished” at how others shot down such proposals without debate.
Instead of a drawn-out dispute – Berlin wants agreement by Christmas – Dr Merkel called for a “sensible balance” between national and EU levels.
“We need solutions that lead to binding reform obligations in member states without undermining national competence, the principle of subsidiarity or democratic process,” she said.
“That’s why we foresee member states signing up to binding reform promises at European level, which are then backed by national parliaments.” Such reform commitments could, she said, be encouraged with incentives from a new solidarity fund financed from a financial transaction tax.
Among legal difficulties yet to be ironed out with the banking regulator, Dr Merkel mentioned concerns of non-euro zone countries at working with a European banking regulator established within the European Central Bank (ECB). One such country, Sweden, has banks with operations divided between their non-euro home-market and Finland, inside the euro zone.
“Ask them how to separate the monetary responsibility of the ECB from the the regulatory responsibility,” she said. “These questions have to be solved well ... so that credibility is increased and not that we’re worse off afterward than before.”
A week after visiting Athens, Dr Merkel told the Bundestag that the “snail’s pace” of structural reforms in Greece was belied by a “serious will to change” and remain in the euro zone.
“From a human perspective it is perfectly understandable that many Greeks have problems understanding that most of their problems are home-made and can only be solved at home,” she said.
Social Democrat (SPD) Peer Steinbrück, hoping to unseat Dr Merkel next year, accused her of playing a “double game” in the euro zone crisis. He noted how the German leader had not intervened over the summer when her cabinet members “bullied” Greece by questioning its future inside the eurozone. “You don’t want to alienate the Eurosceptics in your own coalition while surfing the wave of resentment against a German paymaster role – but without diving in and ruining your reputation in Brussels,” he said.
“Your predecessor, Helmut Kohl, would never have allowed the maltreatment of European neighbours for domestic politics,” he added.
