MEPs agree on proposals towards (EU) 'fiscal union'

EU Observer ^ | 2012.06.13 @ 18:09 | Honor Mahony

[Olog-hai]

The European Parliament on Wednesday (13 June) approved draft laws that would strongly increase Brussels' power over eurozone countries' budgets. But they tempered the previously austere proposals with measures for growth, debt redemption and democratic scrutiny.

"This is the core of a fiscal union," said Austrian MEP and socialist leader Hannes Swoboda.

"This is the first time that there is a structural solution [to the eurozone crisis] on the table," said Liberal leader Guy Verhofstadt. His Green counterpart Daniel Cohn-Bendit called it a "milestone" for the strength of agreement among MEPs.

The pair of laws—also known as the two-pack—is among the most far-reaching ever proposed.

They enable the European Commission to call for revision of national budgets and place single currency countries either in, or approaching, financial difficulties under a tight monitoring regime.

They form the core of the eurozone's attempt to prevent the current crisis from ever happening again. But MEPs, taking advantage of the renewed sense of urgency since the laws were first proposed in November, have added a series of controversial proposals.

They want a European Debt Redemption Fund that would bring together the debt of eurozone countries that is greater than 60 percent of GDP, allowing it to be repaid in the long term at lower interest rates.

The draft would bind the commission to proposing a "roadmap" for establishing eurobonds (the mutualizing of eurozone debt) once the legislation comes into place.

Their revised law would also oblige the commission to come forward with a proposal for a "growth facility" that would see 1 percent of eurozone GDP per year put towards infrastructure projects. …

[Olog-hai]

Create a problem and then impose a solution. Now who used to do that . . . ?

[SunkenCiv]

Thanks Olog-hai.

'The Consolation of Blogging: The European Union -- a State of hopeful confusion'

[rmlew]

The solution to a fiscal crisis created by the inherent paradox of the EU, is to consolidate the union. And people wonder why I call it Eurabia, the Fourth Reich, and the Unholy Belgian Empire.

[Eric in the Ozarks]

The Euro is the first currency created out of whole cloth. Many economists, including Milton Friedman, predicted it would not last a decade. Maybe they were wrong about the timing...

[Olog-hai]

Even all the EU economists predicted the same thing. But after all, that was not the purpose of creating the euro; there was something else in mind, and all the calls for “fiscal union” today should have made it obvious . . .

The European Commission's top economists warned the politicians in the 1990s that the euro might not survive a crisis, at least in its current form. There is no EU treasury or debt union to back it up. The one-size-fits-all regime of interest rates caters badly to the different needs of Club Med and the German bloc.

The euro fathers did not dispute this. But they saw EMU as an instrument to force the pace of political union. They welcomed the idea of a "beneficial crisis". As ex-Commission chief Romano Prodi remarked, it would allow Brussels to break taboos and accelerate the move to a full-fledged EU economic government. …

We all saw what raising interest rates did to Club Med, and for the German bloc. Now watch someone create a treasury out of thin air—and don’t be surprised who it turns out to be . . .