GERMAN CHANCELLOR Angela Merkel is to discuss ambitious plans for euro zone economic governance in Berlin this evening with European Council president Herman Van Rompuy.
Three days after a personal farewell – the death of her father aged 85 – speculation is growing that the German leader is now preparing for a political farewell.
At a private dinner the two politicians are expected to discuss closer economic and fiscal supervision of euro zone states through new institutions parallel to existing EU structures.
In short, the German leader is sounding out the possibility of formalising the so-called “two-speed Europe”.
Long a no-go in German policy circles, Berlin officials have long feared that institutional circles within circles would undermine the EU as a whole. However, now there is a growing feeling in Berlin that waiting for political agreement on fiscal and budgetary reform among the EU 27 – a prerequisite before moving forward in the euro zone – is costing too much financial and political capital.
Moving forward on integration as the euro zone 17, in particular without Britain, would require treaty change and new institutions.
Last week, German finance minister Wolfgang Schäuble proposed the former – sooner rather than later – while the latter will be the subject of this evening’s Berlin dinner.
Moving forward as 17, rather than 27, would allow convergence proposals already agreed on a voluntary basis to become mandatory. For instance, a treaty change allowing euro zone institutions could add teeth to the recent “Europlus” pact, promising greater economic competitiveness. Other plans under discussion in Berlin would allow the euro zone 17 to push for stability pact breaches to land before the European Court.
The start of a new round of the core-periphery debate is likely to draw on a 1994 paper co-authored by Mr Schäuble. The paper calls for the European Parliament to be put on equal footing with the European Council, where heads of state meet.
In addition, the European Commission should be upgraded to a “European government”.
“Core” countries would pool fiscal, economic and social policy-making in a “systematic, determined” fashion, the paper proposes.
A decade ago German foreign minister Joschka Fischer made a similar proposal for a core, federal Europe, but later distanced himself from the idea.
Many member states are nervous about the idea of a “core” Europe, fearing it would sideline the European Commission by expanding the importance of inter-governmental agreements.
German proposals would also face political resistance at home among Dr Merkel’s coalition partners Free Democrats (FDP) and Bavaria’s Christian Social Union (CSU).
“We don’t want that Germany loses its decisive competences in finance and economy policy to Europe,” said CSU leader Horst Seehofer to Focus magazine this morning.
The renewed core-periphery debate in Germany feeds into a summer discussion in Berlin about a federal Europe and the possibility of a European finance minister.
German political analysts see it as Berlin’s answer to calls for eurobonds as a solution to the euro zone crisis.
“Germany is having a lively discussion behind which it’s saying: eurobonds aren’t for free’,” said Ulrike Guerot, Berlin head of the European Council on Foreign Relations. “Collective debt backed largely by Germany can only come with collective decision-making over who spends what.”
