May 21, 2013
In an almost three hour long press conference May 16th, President Hollande has called for a Euro-zone government to overcome recession in the EU.
It should dispose of a separate budget and wide-ranging competence to harmonise taxes and economic and social policy, possess the capacity to issue debts and meet regularly under the authority of a specially designated president.
This proposal, which is part of an initiative for closer political integration to be formalised within the next two years, sounds bizarre.
According to past experience, the EU 28 will need at least eight years to accomplish a treaty revision. Whatever its substance, it will come too late to have an impact on the urgent challenge of combating excessive unemployment in the EU.
The 17 Euro-zone countries have already installed a framework for monetary and economic policy issues years ago. Their finance ministers meet at least once a month, in the presence of the ECB president and the Commissioner in charge of economic and fiscal policy. This arrangement functions satisfactorily.
The idea of a separate budget for the Euro-zone countries is old. Hollande has not offered new arguments to make it more acceptable to all member countries. It would not offer any visible value added, but only add to the complications of an already complex EU reality.
Tax harmonisation is proceeding at EU level, but at snake’s pace. There is no reason to believe that it would advance faster in the Euro-zone, as long as member countries insist on unanimity, firmly anchored in the Treaty.
Debt issuance within the Euro-zone, via so-called euro bonds, would encounter the same political difficulties as at EU level. The EIB serves as the most effective EU-wide instrument for issuing debt and lending for investments in infrastructure, energy, trans-European networks, and, more recently small business.
A “European Energy Community” is a “French baby” more than 20 old. The Lisbon Treaty, with its new article 194, provides for everything that Hollande calls for. Here as everywhere else, EU needs action instead of new institutional frameworks
In conclusion, Member states and EU institutions should ”take note” of the “proposals” made by President Hollande and implement what is on the table.
The focus must be on fighting unemployment. Any discussion on new institutional frameworks will only distract from that overriding concern.Author : Eberhard Rhein