Although the GroKo is not approved yet (Sondierungspapier signed on Jan 12, approved by the the SPD Party Convention on Jan 21, but not from the members yet), it is a pleasure to see the Europhile acting Minister of Finance Peter Altmaier so much contributing to define a possible agenda for the reform of the Eurozone.
We can understand the following from his meeting with Bruno Le Maire in Paris (Jan 18):
- There is a principle agreement on a Euro-zone budget, but not on its size, and not on its purpose. There is an agreement on the funding of investments but not on the funding of counter-cyclical policies.
- Germany wants to condition the establishment of the deposit protection mechanism to
- the reduction of the bad debt in the banks,
- the reduction of the exposure of the banks to their national sovereign debt,
- the convergence of the bankruptcy laws,
- some minimum banking capital requirements.
- There is an agreement on the transformation of the European Stability Mechanism into a European Monetary Fund but no agreement on who should control the future EMF. France wants a clear European control, from the Commission and the EP, Germany is against, and wants the national parliaments to have the final say.
The objective is for France and Germany to come to the European Council of March 22-23 with a common approach on the Banking Union and ESM topics in order to get an approval of these two key elements of the reform of the Eurozone at the European Council of June. In addition to that France and Germany want to agree on a convergence mechanism for the calculation of the corporate taxes in their two countries before June.
Let us be fair, if we succeed in getting this, hopefully with a GroKo, worst case with an acting German government, this would be already extremely useful, and a fantastic achievement. What would be still missing compared to the original plan of reform of the Eurozone would be the creation of the European Capital Market Union and the appointment of a Minister of Finance of the Eurozone.
Naturally the compromise that we shall get in March or June will be determinant. In my view it is more important to get a European democratic control on the future EMF than to get today a budget on future possible counter-cyclical policies. The democratic governance is now a must in Europe if we really want the people to again support the European project. And the truth is that even if we agree today on some capacities to fund future possible counter-cyclical policies nobody knows today what will be, and should be, the true management of the future crisis. Personnally I am still convinced that almost all the crisis of 2012 could have been avoided if we would have followed the idea of the German Council of Economic Experts to set up a Redemption Fund, which Angela Merkel refused, but which would have not cost a single penny to the European or German budget.