Van Rompuy sketches plans for eurozone reform
by Daniel Mason
A central treasury, common decision-making on budgets, debt mutualisation and a new parliamentary body could all be part of the eurozone's future, according to a document – described as an "issues paper" – published yesterday by European Council President Herman Van Rompuy.
The paper was published a day after European Commission President JosÚ Manuel Barroso, in his State of the Union speech, said the European Union should evolve into a "federation of nation states" – as EU leaders push ahead with plans for deeper integration in response to the economic crisis.
At June's European Council summit, Van Rompuy was asked to work with the presidents of the commission, European Central Bank and Eurogroup to develop a roadmap for "genuine economic and monetary union".
That report is due before the end of the year, with an interim version expected in October. The paper published yesterday was designed to "help structure the consultations with representatives of member states and the European Parliament", according to its introduction.
Under four headings – an integrated financial framework, towards an integrated budgetary framework, towards an integrated economic policy framework, and strengthening democratic legitimacy and accountability – the document outlines a series of controversial questions for future debate.
It raises the prospect of a "fully-fledged fiscal union" in the eurozone with a treasury office and central budget – and suggests that joint decision-making on budgets could be accompanied by "limited common debt issuance" if sufficient safeguards were in place to prevent moral hazard. The aim would be to "deal with asymmetric shocks and to help prevent contagion".
Another idea is for debt issuance beyond agreed limits requiring approval from the rest of the eurozone. In addition, the draft suggests that more could be done to "improve the effectiveness and enforcement" of recently agreed changes to the governance of the euro area, such as the fiscal compact that puts limits on member states' debts and deficits.
Meanwhile, after the commission presented proposals for the ECB to act as a single supervisor for the eurozone's 6,000 banks, Van Rompuy's paper asks whether "there are other parts of the financial services sector for which the deep independence in a monetary union would imply a need for further integration".
It also questions whether there are more areas of economic policy that "require common standards" across the eurozone and asks for suggestions about what "further steps could be taken to encourage member states to restore and maintain a high level of competitiveness in a monetary union".
To give this deeper integration greater democratic legitimacy, and ensure citizens "feel that their concerns are recognised and their voices heard", Van Rompuy sketches ideas for "dedicated accountability structures" for the euro area – which could refer to the creation of a eurozone parliament, a proposal likely to cause tensions with the 10 member states that are not part of the single currency.
The eurozone never had more than a sporting chance
If there had not been a global economic crisis all might have been well, in time. But the national markets within the single market showed their different degrees of resilience to the shocks which hit them – and the eurozone became an incipient transfer union – writes our secret columnist
Herman Vqn Rompuy's is a wholly ambitious project that is advanced over the current and pending austerity programmes, based on adjustments to be made by citizens of EU states such as Greece, Spain, Portugal, Italy, Ireland and others - but without their just approval via plebesites and referenda.
That is a veritable tragedy of consequential proportions for the tenuous belief in democracy and Republican government. This is a mindless dismantling of the assumptions of the Treat of Westphalia, which ended more than 100 years of war by establishing recognition of states, a belief in peace based on mutual exchange of interests and the sovereign rights of citizens of respective states to self-determination and independence.
It is change from technocrats from above and like all such changes that are bound to leave the voice of many silent, is very likely set on a stool of self-destruction.
Lloyd Taylor - Trinidad-Tobago, Caribbean