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EU call for tighter fiscal unity likely to sharpen divisions
Question of the Day
BRUSSELS — Four top European Union officials on Thursday set out a blueprint for a closer financial union in a move that will clash with some member states' cherished national interests.
EU Council President Herman Van Rompuy released a report that calls for the EU's 27 members to pool their financial and monetary policies even more than they have so far to combat the region's financial crisis.
He made the proposal alongside the leaders of the EU Commission, the European Central Bank and the Eurogroup, the gathering of finance ministers from the 17 EU countries that use the euro.
The report says there is "a need to go further and to put in place a stronger framework for coordination, convergence and enforcement" of policies.
The report will be used as a starting point for debate at next week's summit of EU government leaders as they seek a way out of the financial crisis by further increasing control over banks and the national budgets of member states.
But the ambitious scope of the integration it proposes is likely to rankle defenders of EU nations' sovereign powers, who fear a transfer of more authority to Brussels.
The report charts development it says Europe's financial and economic backstops should take over the coming years. It says Europe after 2014 should have a centralized authority that can absorb economic shocks in member countries.
The report, which is vague on details, suggests the system would evolve out of Europe's current financial backstops, which include a bailout fund, a nascent banking supervisor and budget checks.
For three years, the EU has been slumping from one crisis meeting to the next to deal with the problems of debt-ridden countries such as Greece.
That's because the original setup for the euro currency zone left far too much independence to nations that could piggyback on the initial success of the joint currency and the zone's richer member nations.
Several measures to keep wayward national budgets from undermining confidence in the common currency already have been taken.
But the initial flaw of the eurozone – having no way to enforce sound financial and economic decision-making among national authorities – has yet to be fully addressed, the 15-page report says.
After 2014, the 17 nations that use the euro should "also build on an increasing degree of common decision-making on national budgets and an enhanced coordination of economic policies, in particular in the field of taxation and employment," the report says.
While the report proposes much closer integration – even beyond the 17 eurozone nations – as a way to step away from the stopgap measures that have marked the EU's reaction to the crisis, it poses prickly political questions.
The report, for example, suggests chipping away at the powers of national parliaments, especially when discussing the common interests of the eurozone.
It says "national parliaments are not in the best position to take [the interest of the eurozone] into account fully" and calls for more involvement of the 27-nation European Parliament.
That is unlikely to go down well in Germany, the biggest contributor to EU financial bailouts, which throughout the crisis has insisted on the need for parliamentary approval of important decisions.
Britain, meanwhile, has been opposed to yielding more authority to EU headquarters and has been joined recently in that opposition by some of the richer eurozone nations, such as the Netherlands and Finland.
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