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PROPOSALS AND PROSPECTS FOR THE REFORM AND COMPLETION OF EUROPEAN MONETARY UNION
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– An emergency credit line to cope with finan-
cial crises (stabilization measures to prevent
defaults).
– A fund to respond to economic crises (coun-
ter-cyclical stabilization measures).
Access to the eurozone budget would de-
pend on compliance with fiscal rules and social
and employment standards, in order to prevent
social dumping. Macron also proposed the crea-
tion of a specific minister of Economy and
Finance for the eurozone, who would be res-
ponsible for the euro budget, under the control
of a special euro commission in the European
Parliament. These are specific and highly inno-
vative proposals which have been supported by
other countries, such as Portugal, and are con-
sistent with the ideas defended by the European
Commission, among others.
Over the course of 2017, several members
of the German government expressed their di-
sagreement with Macron’s ideas. The two prin-
cipal points of conflict between Paris and Berlin
related to:
– The size and scope of the eurozone budget.
– The role and mandate of the Eurozone
Finance Minister.
The size and scope of the eurozone budget
The essence of Macron’s proposal is to equip the
countries of the eurozone with the capacity to
raise money to fund a specific budget. This
common budget should be sufficient to provide
the basis of a solid investment strategy and to
guarantee stability and swift recovery in the
event of economic recession or financial crisis.
President Macron was at pains to stress the
need for greater financial solidarity.
On the German side, the initial reactions of
Chancellor Merkel appeared positive, when she
did not rule out the creation of a specific minis-
ter for the eurozone and signalled her acceptan-
ce of a modest budget or common fund to help
the weakest economies to implement economic
reforms. However, in essence, the German go-
vernment takes the view that any potential bud-
get should be seen exclusively as a means and
an incentive to support and achieve these struc-
tural reforms. In this view, a substantial inves-
tment policy and an automatic stabilization
function are not deemed to be acceptable op-
tions.
This divergence of opinions is also reflected
in the debate as to whether the European
Stability Mechanism should be transformed into
a European Monetary Fund. The German view is
that the EMF should be responsible for budge-
tary supervision, and that financial support
should come with strict conditions; by contrast,
the French see the EMF as something closer to a
de facto budgetary authority for the eurozone.
The role and mandate of the eurozone Finance
Minister
Both governments appear to support the idea of
a dedicated eurozone minister, although the
functions would probably differ depending on
which design was adopted. Berlin has talked
about a Minister of Finance chairing the
Eurogroup, with substantial powers to coordina-
te economic and fiscal policies, and to ensure
that fiscal rules are respected. However, both
Macron and the current President of the European
Commission, Jean Claude Juncker, argue for a
“strong” minister, who is responsible not just for
financial control but also for macro-economic
management. This would make the minister res-
ponsible for managing the budget and inves-
tment required to ensure long-term growth.