Today, the Commission presented its so-called „St. Nicholas package“ on the reform of the Economic and Monetary Union. The proposal includes the creation of a European Monetary Fund (EMF), integrated into the legal framework of the EU. The EMF shall emanate from the European Stability Mechanism (ESM) and help out Member States and banks facing financial difficulties. Furthermore the Commission proposes an Investment Protection Scheme as a macroeconomic stabilisation function for asymmetric shocks. In this way, the Commission intends to continue financing public investments during crisis if Member States are restricted by budgetary rules. It will also be discussed how to combine the tasks of the Commission Vice-President for the Euro, the head of the Eurogroup and the chairman of the new Monetary Fund in the new role of an EU Minister of Economy and Finance. Financial support coming from the EU budget for structural reforms of Member States is to be doubled and the budgetary rules of the Stability and Growth Pact are to be tightened.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“The proposals are an important step towards a more stable and democratic eurozone. The EU Commission supports Macron’s course instead of Merkel’s despondency. The German government should take the EU Commission’s proposal as an opportunity to end its blockade. Europe needs results instead of hesitation. We now have a constructive proposal on the table. Only through more investments and more democracy the eurozone will become fit for the future.
But: the EU Commission is only taking a half-hearted step in the right direction. There are still shortcomings regarding the plans for a European Monetary Fund: the Monetary Fund is planned to be too tightly controlled by national governments. The Monetary Fund will be thwarted if large countries can continue to block decisions by means of a veto. The Monetary Fund would only be genuinely democratic if the European Parliament would receive strong co-decision rights. It is right to make the future Monetary Fund a final backstop for joint banking resolution, because it gives additional credibility to the current resolution mechanism. Without a backstop, the banking resolution mechanism is already overburdened with medium-sized banks, as the case of the Spanish Banco Popular has shown.
The investment protection programme is a positive step towards cushioning crises in individual EU countries. Until now, there has been a lack of opportunities to counteract a crisis through investments. This could mitigate the increase in poverty and unemployment in times of crisis. However, the Commission’s proposal does not go far enough. It would be more effective to simplify and adapt the Stability and Growth Pact in order to allow more counter-cyclical spending by the Member States. The proposal on national fiscal policies contained in the package breathes the spirit of the failed austerity policy: tightening the budgetary rules while at the same time making labour markets more flexible would lead to further precarious situations of lower income groups. The Commission rightly wants to break down rigid structures with support for structural reforms. If the structural reforms in the European semester, however, continue to have a neoliberal bias, this can do more harm than good. The proposal to create the post of an EU Finance Minister is a step in the right direction. The accountability of an EU finance minister would at last shed light on the obscurity of the Eurogroup’s decision-making processes, which have not been transparent, yet.
Following the Commission’s first draft, it is now Merkel’s turn obliged to respond. The German government should finally join the course of Macron and the EU Commission. Germany’s refusal to act threatens the stability of Europe. We Greens are prepared to take responsibility for these reforms, even without government involvement. CDU, SPD and FDP are hurting Europe if they continue to resist. Europe needs more democracy and stability through a greater Economic and Monetary Union.“