EU summit: Merkel agenda for euro reform riles France

 
French President Francois Hollande and German Chancellor Angela Merkel arriving at EU summit in Brussels, 18 Oct 12 The smiles could not conceal Franco-German tensions over EU integration

The German chancellor has called for the EU to be given the power to veto member states' budgets, as leaders meet in Brussels for a summit.

Angela Merkel said the EU economics commissioner should be given clear rights to intervene when national budgets violated the bloc's rules.

But French President Francois Hollande said the summit must keep focused on plans for a banking union.

He wants action to revive growth, while Germany stresses budget discipline.

"The topic of this summit is not the fiscal union but the banking union, so the only decision that will be taken is to set up a banking union by the end of the year and especially the banking supervision. The other topic is not on the agenda," Mr Hollande said.

The banking union plan is fraught with legal complications, as it would give more powers to the European Central Bank (ECB) and possibly weaken those of national regulators. There is speculation that it could lead to treaty changes - something that has caused big headaches for the EU in the past.

The aim is to agree first on joint banking supervision, with the ECB playing the lead role. But the UK - the EU's main financial centre - wants safeguards to protect the powers of the Bank of England.

The UK and some of the other nine non-euro states are also concerned about voting rights in the proposed banking union.

Banking union - Brussels' 3-stage plan

  • Single supervisory mechanism (SSM)
  • Joint resolution scheme to wind down failing banks
  • Joint deposit guarantee scheme

France and Germany differ over the timetable for such a union, with Berlin advocating caution.

Germany is also at odds with the European Commission over the scope of the proposed ECB supervision. Under the plan, all 6,000 banks in the 17-nation eurozone would be included, but Germany wants it limited to the biggest, "systemic" banks.

As the summit got under way its chairman, European Council President Herman Van Rompuy, invited all 27 leaders to attend the Nobel Peace Prize ceremony in Norway. The EU was awarded the prize last week.

"To mark this joyful occasion I hope all EU Heads of State or Government will be able to join celebrations in Oslo in December," he said on Twitter.

But Greece, the eurozone state worst hit by the debt crisis, was gripped by another 24-hour general strike on Thursday, with at least 20,000 protesters thronging central Athens, amid clashes between demonstrators and police.

'Quality before speed'

Addressing the German parliament in Berlin on Thursday morning, Mrs Merkel said the EU should have "real rights to intervene in national budgets" that breached the limits of the EU's growth and stability pact.

The EU's economics commissioner, she suggested, should have the authority to send a budget back to a national parliament.

The BBC's Mark Lowen says petrol bombs were thrown, with Greeks feeling "pushed to breaking point"

Unfortunately, Mrs Merkel said, some EU member states were not ready for such a step.

"I am astonished that, no sooner does someone make a progressive proposal... the cry immediately comes that this won't work, Germany is isolated, we can't do it," she added.

"This is not how we build a credible Europe."

On the banking union Mrs Merkel has repeatedly stressed that "quality must trump speed".

Prime Minister Fredrik Reinfeldt of Sweden, one of the 10 EU countries outside the euro, echoed her stance, saying "there are a lot of questions that need to be answered legally" and "it's better to get things right than to rush things".

The idea is that the ECB would be able to intervene early on to prevent a systemically dangerous accumulation of debt on a bank's balance sheets.

Once the legal framework is in place the new permanent rescue fund, the European Stability Mechanism (ESM), will be able to recapitalise struggling banks directly, without adding to a country's sovereign debt pile.

The prize is a system that avoids huge taxpayer-funded bailouts like those arranged for Greece, the Republic of Ireland and Portugal.

UK 'pulling away'

The summit is taking place amid calmer European stock markets than at previous meetings and with less immediate concern over the debt crises in Spain and Greece, analysts say.

UK Prime Minister David Cameron made it clear that improving the EU single market was his priority at the summit.

He said that in the "global race" there was a risk of the EU falling behind.

The EU single market "still isn't finished, in digital, in services, in energy, and that is the agenda I'll be pushing very hard at this council", he said.

Later Finland's Europe Minister, Alex Stubb, said the UK was looking increasingly isolated and the summit appeared to be "26 plus one".

"I think Britain is right now, voluntarily, by its own will, putting itself in the margins," he told Reuters news agency.

"It's almost as if the boat is pulling away and one of our best friends is somehow saying 'bye bye' and there's not really that much we can do about it."

 

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  • rate this
    +13

    Comment number 637.

    How on earth anyone in the EU could have expected total harmony between so many countries beats me.

    Germany has got it right. Stringent measures are vital to Europe's future - so long as the UK opts out of everything it can, the EU should be left to sort out its troubles without interference by us, or protests from underperforming nations.

  • rate this
    +5

    Comment number 636.

    It seems as if the EU and Germany are becoming one and the same. If Germany doesn't get off its high horse other nations having economic problems may just say good bye to the EU. In many ways the EU doesn't really help Greece, Spain, and Italy. The EU dollar is strong due to German stability and manufacturing. The strong European currency make it difficult for the lesser states to trade & balance.

  • rate this
    +6

    Comment number 635.

    The sooner countrys' return to their own currency and start running their own economy again the better. At least then, if any given nation chooses to cook its own books, and/or spend more money than it can actually can raise, it wont be able to point the finger of blame towards anything but itself ! The EU is an unholy mess...it's time to say ...Adieu !

  • rate this
    -2

    Comment number 634.

    616.
    Wonder
    "the EU accounts have not been signed off"

    http://en.wikipedia.org/wiki/Court_of_Auditors

    'Auditor General for the United Kingdom stated that there were 500 separate accounts for the UK and "in the last year, I qualified 13 of the 500. If I had to operate the EU system, then, because I qualify 13 accounts, I might have to qualify the whole British central government expenditure'

  • rate this
    +7

    Comment number 633.

    628.View_Germany
    'Just saying "no" to everything of the EU is not a constructive contribution but testfies the very selfish UK position just going for the own advantage'

    Please do not try to tell us that Germany are doing anything for anyone other than themselves.

    Kicking the can down the road is Germanys only hope to keep their economy and lifestyle as it is.

  • rate this
    0

    Comment number 632.

    #625.
    You won't get much rational argument of the merits or otherwise of the current proposals.

  • rate this
    -5

    Comment number 631.

    Scotland could ,if they vote for independence, end up in a better situation than that which we are in at the moment as regards the EU, and end up with the same status as Jersey, ie not a member but being regarded as one for the purposes of free trade in goods, which is what most people here want and not a federation of member states.

  • rate this
    +7

    Comment number 630.

    Nobody under the age of 55 in Europe was even asked if they want people in Brussells controlling their lives.

    I wasn't asked - were you?

    We need a Confederate States of Europe for everybody who wants free-trade and mutual defence - NO outside interfering in our Soveriegn laws and regulation.

    Time to disband the EU, or completely ignore it.

  • rate this
    +2

    Comment number 629.

    #615 further.

    Perhaps the matter of Greek ejection could be referred for consideration, by Justice Gloster.

  • rate this
    -14

    Comment number 628.

    At least Angie of Germany makes useful suggestions for a sustainable budget policy - controlled by the EU commissioner (not Germany1).

    Just saying "no" to everything of the EU is not a constructive contribution but testfies the very selfish UK position just going for the own advantage.

    Thie is a "zero-" performance of the UK.

  • Comment number 627.

    All this user's posts have been removed.Why?

  • rate this
    +4

    Comment number 626.

    "Do you think the UK should stay in the European Community (Common Market)?". That was the 1975 referendum question.


    The main part was the common agricultural policy. Now if you were lucky enough to have voted on this (I was not even born), do you think what the common market has become has any relation to what you voted on?

    I would say your were conned.

  • rate this
    0

    Comment number 625.

    A couple of pointers: 1) Angela Merkel has opined that a Commissioner should hold a veto against budgets which breach the Stability Pact: as with anyone, she is entitled to make suggestions. 2) The Banking Union would only apply to the Eurozone, whilst a 'handbook' would provide the framework for the most effecitve linkages between that regime and the supervisory arrangements of non-Euro EU states

  • rate this
    +1

    Comment number 624.

    577.
    democracythreat
    "Without the UK, Russia, Switzerland or Norway, there is no Europe"

    Sadly, if the UK leaves the EU, I think Denmark and Sweden will follow.

    I am not sad about Russia not being part of the EU though.

  • rate this
    +1

    Comment number 623.

    Looks like a new EU treaty is in the offing

  • rate this
    0

    Comment number 622.

    @612 Wrong. If the Scots join the EU as a separate nation they will be forced to hand over most of the oil revenues to support Club Med.

  • rate this
    -1

    Comment number 621.

    596. Glen
    Germany, China – we are upper class we look down on them.
    United Kingdom – we are middle class we look up to the them and down on them
    Ireland Greece and Spain – we are lower class, we know our place
    Don’t aspire to too much is that what you are saying.

  • rate this
    +2

    Comment number 620.

    “there are some in this country who fear that in going into Europe we shall in some way sacrifice independence and sovereignty. These fears, I need hardly say, are completely unjustified”. Edward Heath Conservative Prime Minister. Ring any bells?

  • rate this
    0

    Comment number 619.

    600 It was a union between England and Scotland a union of 2 equals I am afraid the union will be dissolved and the 2 original nations will come back into being, neither of which signed the 1973 treaty . There is no successor nation. 2 people divorce the marriage is dissolved.

  • rate this
    -1

    Comment number 618.

    Don't know why people a) take it for granted that Scotland will have to apply for EU membership and b) assume they will be turned down. The former may be the case, but if so I expect it to be a mere formality.

 

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