Jean-Claude Juncker, the European Commission president, again raised eurozone integration proposals at a summit of EU leaders on Thursday night, including the possible creation of a eurozone-only budget and new EU institutions to serve the single currency.
The ideas, contained in an eight-page “analytical note” distributed to EU leaders and obtained by the Financial Times, are the first signal that Mr Juncker intends to press for further consolidation within the eurozone despite rising anti-Brussels sentiment in many member states.
Although the note does not make specific proposals, it raises a series of questions that make clear that Mr Juncker is weighing some ideas that are deeply unpopular in several capitals.
Efforts to further integrate and reform the eurozone largely stalled a year ago as financial markets calmed and EU prime ministers made clear they were suffering from reform fatigue.
But Mr Juncker’s memo argues that the failure to press ahead may be contributing to the currency area’s economic malaise, noting that the US has not suffered from similar problems.
“The euro area has not recovered from the crisis in the same way as the US, which might point to the fact that an incomplete monetary union adjusts much slower than one with a more complete institutional set-up in place,” the note reads.
Mr Juncker presented the memo as part of a process urged in October by Mario Draghi, European Central Bank president, to kick-start integration efforts.
The two presidents, along with Donald Tusk, president of the European Council, and Jeroen Dijsselbloem, head of the eurogroup committee of eurozone finance ministers, are due to present a full-scale blueprint of new integration measures at an EU summit in June.
Although the process was formally requested at a eurozone summit in October, it has not been enthusiastically embraced in several capitals that would rather not revisit the occasionally bruising debates over the future of the currency that occurred at the height of the eurozone crisis.
In addition to raising awkward questions anew, the memo also scolds eurozone governments for slacking off on economic reforms, arguing that the “current favourable financial market conditions” have caused “counterproductive effects with regard to the willingness of national governments” to reform.
“A renewed political consensus at the highest political level is necessary to proceed with those structural reforms which should be tackled as a priority across the euro area,” the memo reads.
The most controversial part of the memo is likely to be an 11-point list of questions which suggest that fraught political fights could be in store for the eurozone. It asks whether a new eurozone budget is “desirable”, an idea long objected to in Berlin.
It also asks whether new “common institutions” are needed for the eurozone, something pushed for by Paris but often seen sceptically by non-euro countries, such as Britain, which fear that it could split the EU’s common market.
Despite repeated signs that most eurozone governments are resistant to new rules that would bind them into economic reforms, something viewed by many as akin to forcing countries into bailout-style reform programmes, the Juncker memo asks whether tougher rules are needed to ensure that reforms are carried out.
“What instruments are needed in situations in which national policies continue, despite surveillance under the governance framework, to go harmfully astray?” the memo asks. “Under which conditions and in which form could a stronger common governance over structural reforms be envisaged?”
It also suggests that Mr Juncker is weighing the idea of a eurozone-only parliament, asking how “accountability and legitimacy” can be best achieved in a “multilevel set-up” like the EU’s monetary union.
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