Across the German political spectrum, and among the nation’s business and banking community, pressure is growing for “more Europe” as the answer to the plight of the eurozone.
The details of how such closer-knit integration would work are still up for debate, but the overall direction is backed by a clear majority of the ruling Christian Democratic Union, headed by Chancellor Angela Merkel, and her liberal Free Democrat partners. The German Federation of Industry (BDI), the powerful manufacturers’ association, is in favour, and so are the opposition Social Democrats (SPD) and Greens.
Last week the call for constitutional change to underpin more European unity even won support from Josef Ackermann, chief executive of Deutsche Bank, although he criticised the government’s handling of the current crisis.
Policymakers are well-versed in the logic of the debate: the eurozone crisis exposed the lack of economic integration needed to complement the European monetary union. But if the 17 partners in the common currency are going to interfere in each others’ national fiscal strategies – hitherto regarded as the cornerstone of national sovereignty – then closer political integration is essential, say proponents.
The trouble is that Germany – the largest net contributor to the EU budget, the biggest single guarantor of eurozone rescue plans, and the motor of the European economy – seems to be way out in front of its partners in such thinking.
The Netherlands and Finland are worried that Germany, with France, wants more “intergovernmental” deals, weakening the European Commission and parliament. Paris says it backs Berlin, but in practice is much more hesitant. Ireland – where referendums are required for any treaty change – is openly hostile.
After the bruising experience of failing to ratify a new EU constitution, rejected by No votes in France and the Netherlands in 2005, and then further battles to get a watered-down Lisbon treaty approved in 2009 after an Irish No, very few countries have the appetite for another attempt at fundamental reform.
The UK, the most eurosceptic EU nation of all, would oppose most of Germany’s ideas on the subject, but seems to be ready to approve anything that only affects the eurozone, rather than the full 27-nation EU.
Berlin does seem to have one influential backer, however: Jean-Claude Trichet, outgoing president of the European Central Bank.
In an interview on French radio, he said it was necessary to change the treaty “to prevent one member state from straying and creating problems for all the others.” Asked if that meant getting rid of national vetoes, he added: “To do this, one even needs to be able to impose decisions.” Some of the ideas being discussed in Germany include the establishment of a European monetary fund, budget rules that are enforceable in the European court of justice and a transfer of elements of budget sovereignty from national capitals to Brussels.
A Dutch proposal for a European commissioner for the euro – a sort of European finance minister – with powers to impose automatic penalties on countries that break strict budget discipline has also been embraced in Berlin.
Another idea that certainly would be on the table in any treaty-change negotiations – the introduction of jointly guaranteed eurobonds to help finance eurozone nation borrowing – is only backed in Germany by the SPD and Greens. That could embarrass Ms Merkel.
Last week Guido Westerwelle, German foreign minister and former leader of the liberal Free Democrats in the Berlin coalition, suggested a timetable for treaty change: establishment of a drafting convention in 2012, with a deadline of 2013 to complete its work.
European integration will be the main theme on the agenda of the CDU at its party conference in Leipzig in November. Already, outlines of the main resolution are emerging. It may be more pro-European than the chancellor would like.
The draft resolution commits Germany to strengthening the “community method” and avoiding “intergovernmental” deals.
Most of the eurozone rescue plans so far agreed have been intergovernmental deals. So are Franco-German plans for more “economic government”.
German business is pro-European. The BDI called for a new treaty in September, with a radical document including the idea of a European fiscal fund, amalgamating the EFSF and ESM, with tough conditions for borrowers, and voting rights reflecting financial contributions. It would be “politically independent”.
To German eyes, the next step forward in the EU – or at least in the eurozone – must fill in the gaps left by the Maastricht treaty that created a monetary union without a fiscal union. Germany’s partners may not like it, but if Germany is going to remain the main financial guarantor of the euro, treaty change may be unavoidable.
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