Council at odds with MEPs over reforms
EU governments, MEPs and the European Commission are deeply divided over proposals to reform financial supervision in the EU.
The reforms were proposed by the Commission last year and the finance ministers of the EU reached an initial view on the proposals last December. But the draft legislation has now gone to the European Parliament for consideration and MEPs seem set on reversing attempts by national governments to water down the Commission’s proposals.
Parliament’s lead MEPs on the various proposals will next week (23 February) present their draft reports seeking to restore aspects of the Commission’s original proposals that were rejected by national governments in December. They will also propose further innovations that are likely to divide the Council of Ministers. The MEPs regard the supervisory arrangements agreed by governments as too weak to deliver financial stability.
But even before the MEPs’ proposals are published officially, national governments are warning them against trying to secure major changes to the deal reached by finance ministers in December. They warn that the Parliament risks wrecking a fragile consensus in the Council of Ministers, and with it any possibility of getting the new supervisory system up and running by the target date of 1 January 2011.
“I don’t quite understand what the problem is with the Parliament side; at the national level, it’s a very delicate issue,” Jyrki Katainen, Finland’s finance minister, told European Voice.
The draft reports from MEPs, which have been circulating unofficially since last week, have raised hopes in the Commission that its original proposals could form the basis of a compromise between the two institutions.
Michel Barnier, the European commissioner for the internal market, said: “I will be working with the Council and the Parliament to try to strike a balance so we can have an integrated and efficient system of supervision.”
Many of the bigger changes made by ministers in December to the Commission’s original proposals were pushed through by the UK, with support from several smaller member states. The UK government was concerned that the proposed new EU-level supervisory authorities for the banking, insurance and securities industries might interfere with a national government’s autonomy over how to spend taxpayers’ money.
“The unanimous agreement reached in the Council strikes the right balance between effective supervision at the national and EU levels,” a UK official said. “It’s important that MEPs look to retain this balance as their discussions progress.”
The UK negotiated changes to the Commission’s proposals that would make it easier for a member state to overturn an EU-level supervisory decision if it felt the decision impinged on its fiscal responsibilities.
The changes included reducing the majority that a country would need to secure in the Council to overturn a decision, and granting member states a right to refer such a decision to the European Council, where government leaders meet. E
Alistair Darling, the UK’s finance minister, has described the right of referral as “effectively a veto”. The Parliament’s draft reports, however, propose to undo the changes that Darling secured.
The draft reports also contain ideas that go beyond the Commission’s original proposals, including the creation of a European Financial Protection Fund to pay for future bank bail-outs. Banks themselves would be the primary contributors to the fund, although member states would be required to provide public money as a last resort.
Sven Giegold, a German Green MEP responsible for draft legislation to set up a European Securities and Markets Authority, said that he and the other lead MEPs had “further strengthened” the Commission’s proposals.