The State of the European Union. The European Parliament faces its most important elections yet

THE STATE OF THE EUROPEAN UNION 54 The idea of more resources for the EU and an independent eurozone budget was rejected even more strongly from spring 2018 onwards by a group of states dubbed the “Hanseatic League”, initially consisting of eight EU states: the Netherlands, three Scandinavian states, three Baltic states, and Ireland, and later 12 states (with the addition of Belgium, Luxembourg, Malta and Austria). The “Hanseatic League”, which opposes a deepening of the European integration process, includes many states, such as Belgium, Denmark, Sweden, Finland, the Netherlands and Austria, where right-wing populist parties carry enough weight to strongly influence the country’s po- litical climate. In some of these states (Belgium, Denmark, Austria), they are now part of coali- tion governments. Consensus is needed for all questions relating to EMU reform and the future medium-term fi- nancial framework of the EU. Thus, it was clear even before the summit in July 2018 that the up- coming negotiations offered a very low chance of realising Macron’s larger plans, the less ambi- tious demands of the European Commission, or even the restrictive ideas of Germany. At the summit in June 2018 all decisions were postponed, and the prospects for the suc- cess of the December summit did not improve over the summer and autumn. French resentment of Germany’s lack of sup- port grew stronger from month to month. France and Germany finally presented a pro- posal for a eurozone budget in November, but it had significant shortcomings. This eurozone budget was to become an integral component of the EU budget, which would have to be agreed by all 27 member states. The eurozone member states were to make additional contri- butions to this budget, and the scope of re- sources and the distribution model were still to be determined. On the basis of a programme that was still to be determined, the euro states could then apply for grants for investments and projects benefiting the convergence and/or competitiveness of the eurozone and/or increas- ing its stability. This proposal was generally con- sidered to be a face-saving exercise for the French president. However, even these modest ambitions were doomed to failure from the start, as the Netherlands, Austria and Italy immediately raised objections. The spokesman for the “Hanseatic League”, Dutch Finance Minister Hoekstra, ex- plained that he could see no point in the proposal. At the meeting of Eurogroup finance minis- ters on 4th December 2018, the Franco-German proposal was dismantled. The report to the European Council said that negotiations could continue on a eurozone budget “to improve convergence and competitiveness”, but that it was impossible to reach consensus among the member states on this type of budget for “sta- bilisation of the eurozone” (Eurogrup, 2018). The European summit on 14th December 2018 then finally laid the idea of a stabilisation function to rest. It is not even mentioned in the summit declaration (European Summit, 2018). On the other hand, further work is to be carried out on the budget instrument for convergence and competitiveness. However, everything is still up in the air about this instrument, as a unani- mous decision will have to be made at a later date regarding its financial scope in the context of the medium-term financial framework. Decisions were also made at the European summit regarding the ESM, which is not to be transformed into a European Monetary Fund as the Commission wants, but merely expanded in certain respects. However, in this case too, the details will still need to be negotiated further in 2019 and 2020.