German policy threatens to affect eurozone reform – EURACTIV.com

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The French and German leaders will meet on Tuesday, June 19 in Berlin for a preparatory summit for the European Council at the end of the month. But the two countries continue to have different opinions on the subject of the economy. EURACTIV.fr reports.

European countries will finally have to agree on an ambitious roadmap for the euro zone, but also defense and migration at the European Council on June 28-29. German Chancellor Angela Merkel and French President Emmanuel Macron meet on June 19 to prepare for it.

However, an unprecedented political crisis in Germany calls into question any ambitious reform so far. “This is the end of the Merkel method, which does everything too little, too late, for fear of the next elections. This time it won’t work anymore, ”said a German MP.

Elections will be held on October 14 in Bavaria, where the CSU, the CDU’s historic ally, operates. To ensure their victory, the members of the CSU constantly challenge Merkel, in particular on the issue of migration, going so far as to threaten to leave the parliamentary group, which would de facto put an end to the current government.

Limited response from Germany

Angela Merkel is therefore in a rather delicate situation. At a time when France is reaching out for the construction of a budget for the euro zone, a subject which was still a red line for the French Minister of Finance Bruno Le Maire, the German response risks being extremely limited .

The “too political” vision of the European Semester, the process of controlling national budgets managed by the Commission, did not please Berlin. Since 2014, the Juncker Commission and French Commissioner Pierre Moscovici have in fact adopted a more flexible position than the previous Commission vis-à-vis the countries which spend the most, in order to maintain European support for the project.

But for Berlin, their analysis “lacks objectivity”, according to a member of the Chancellor’s council, and Merkel plans to entrust this supervisory role to the European Stability Mechanism in exchange for strengthening its resources.

This would be a minimal response to France’s ambition to tackle macroeconomic imbalances in the euro zone by promoting investment transfers to countries that lack it most, particularly in the South.

“The European Stability Mechanism no longer functions today because there is only one troubled country left, Greece, so it makes sense to give it a new mission,” said a source in Berlin, where Klaus Regling, the German director general of ESM, is considered more reliable than the EU executive.

France increases pressure on the euro zone budget

Without reform, the euro zone will not survive, according to the French Minister of the Economy, adding to the pressure on Germany a few weeks before a crucial European Council summit. EURACTIV.fr reports.

Germany seems ready to step up the pace to complete the reform of the multiannual financial framework (the European budget 2021-2027) by the end of the year, which is not correlated with France.

Insofar as it proposes to add funds: the Commission has put forward a proposal to invest 1.1% of each country’s GDP, which would imply increasing the contributions of net contributors, such as France and the Germany. On the French side, the government does not see an urgent need to accelerate the pace, in particular because of a disagreement on the common agricultural policy.

In the absence of a euro zone budget, German Finance Minister Olaf Scholz recently put forward the idea of ​​European unemployment insurance. At the macroeconomic level, such a proposal has an appeal comparable to that of a common budget, allowing a minimum of redistribution and thus mitigating asymmetric shocks.

But such a proposal is unlikely to succeed because of the timing: it would be difficult to complete such a project in a month. On the other hand, the same SPD minister torpedoed the idea of ​​the digital tax dear to France, which would recover part of the tax that Europe cannot collect from GAFA (Google, Apple, Facebook, Amazon) .

Therefore, on economic issues, there does not seem to be a divided point of view and solution. However, Europeans expect the EU primarily on security and migration issues.

“The real urgency is to make a Europe which protects, and this concerns security and defense, not economic questions”, declared Joachim Bitterlich, diplomat and former adviser to Helmut Kohl. Bitterlich also said that the advances on common defense due to be presented at the end of June “represent a big step for Germany”.


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