In a long night session of the Eurogroup in the inclusive format, the finance ministers agreed on steps to reform the Economic and Monetary Union. They want to start the backstop for the EU banking resolution at the European Stability Mechanism (ESM) at the latest in 2024 or earlier, provided that risks in the banking sector have been reduced sufficiently. Ministers also decided to overhaul the precautionary credit lines of the ESM and to define the cooperation between the ESM and the Commission in the economic adjustment programmes and in particular in the debt sustainability analysis in a memorandum of understanding. The finance ministers have refrained from amending the ESM Treaty and bringing the ESM into the EU legal framework, as proposed by the Commission. Further agreement was reached on the eurozone budget on the basis of the Franco-German proposal. The finance ministers call on the heads of state and government to give a mandate next week for the further development of this instrument within the EU’s multiannual financial framework.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“The cautious reforms are better than nothing. It is however just a tiny reform, not the necessary overhaul of the Eurozone. With these small steps the road to a crisis-proof Eurozone remains long. Equally the finance ministers have failed to make the eurozone more democratic. The European Parliament will continue to be left out of euro politics. The eurozone budget is too small to have a stabilising effect. The wee budget does neither allow sufficient investment nor stabilisation. Unemployment and poverty cannot be alleviated by these eurozone budget in the next crisis.
These reform steps are too timid for the hoped-for stabilisation of the eurozone. There is little left of Macron’s strong proposals. All more far-reaching proposals have been cancelled or postponed, including a democratically legitimised European Monetary Fund, a financially strong eurozone budget financed by a common corporate tax, a common unemployment insurance scheme, a common deposit guarantee scheme, eurobonds and a euro finance minister. Although a stable Eurozone is in Germany’s interest, the German Federal Government has blocked more far-reaching reforms. This stalemate on the part of the German government could become very expensive in the next crisis. As things stand today, the Eurozone is not much better equipped for the next crisis than it was in the past.”