German Finance Minister Wolfgang Schaeuble said he wants legal changes to European Union treaties as early as next year to strengthen the euro area’s ability to enforce budgetary discipline, threatening to stoke tensions with the U.K. and France.
Schaeuble said the proposals, which he discussed with Chancellor Angela Merkel, would give the EU’s monetary affairs commissioner powers to reject national budgets and keep European Parliament lawmakers from non-euro states such as the U.K. from blocking decisions that only affect the euro region.
“We must take bigger steps toward fiscal union now,” Schaeuble told reporters today on his return flight from a meeting of finance chiefs in Asia. “We could be ready by December to call a convention” to prepare the treaty changes.
Three years after the euro region’s sovereign debt crisis erupted in Greece, Schaeuble is stepping up efforts to shift powers away from national governments toward the EU while giving the EU’s parliament more democratic legitimacy.
That risks a clash with Prime Minister David Cameron, who has pledged to renegotiate Britain’s relationship with the EU in a range of policy areas. Home Secretary Theresa May said yesterday that Britain wants to opt out of more than 130 EU policing and justice powers.
Schaeuble’s plan is also silent on common debt issuance as sought by Spanish Premier Mariano Rajoy in a proposal made public today in Madrid. Spain’s blueprint calls for a European Budget Authority to issue two-year bills in the mid-term, and then mid-term and long-term debt as it acquires more powers to supervise the execution of fiscal goals.
Countries would gradually join the fiscal union as they comply with a list of economic and fiscal criteria, including limited risk premiums, according to the document. In the last stage, fiscal policy would be completely transferred to the euro zone level.
European leaders meeting in Brussels on Oct. 18-19 will scrutinize a report by EU President Herman Van Rompuy on long- term steps to strengthen the monetary union. Schaeuble said his plan on moving toward fiscal union was discussed for about two hours at a meeting of European finance ministers in Luxembourg last week.
Under his proposal, the EU’s monetary affairs commissioner would get far-reaching powers including the right to reject national budgets once they’re drafted and while they’re executed if they violate stability rules, without having to seek the consensus of fellow commissioners.
In the European Parliament, lawmakers from the U.K. and other countries outside the currency would be barred from voting on euro-region matters and topics related to the so-called Schengen area of liberalized travel within Europe would only be dealt with by parliamentarians from Schengen countries, he said.
“We have to include the parliament more right from the start,” Schaeuble said. “We want to go further” on deepening European integration, he said.
Asked whether Merkel backs his proposals, Schaeuble said that while “the chancellor and the finance minister are always on the same page,” Merkel is “slightly more cautious than I and that’s why she’s also a bit more successful.”
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