Twice-yearly summits of the heads of the seventeen euro-zone governments are to become the “cornerstone” of the new economic government of the euro-zone, according to Nicolas Sarkozy and Angela Merkel. They are also pushing all seventeen states that use the euro to enshrine balanced budgets in their constitutions.
In a letter to the president of the EU Council, Hermann van Rompuy, they say the meetings “will take place twice a year and, if necessary, extraordinary meetings will be called.” The meetings should be used to make sure the euro’s Stability Pact is being adhered to, “discuss any difficulties encountered by certain member-states, and take the necessary decisions to prevent crises.”
The formalisation of the top-level meetings is likely to reignite debate about the merits of deepening the political gap between those countries using the euro and the ten member-states outside the euro zone. Van Rompuy, now in charge of the meetings of the EU Council, representing all twenty-seven governments, is also put forward as a candidate to be the first elected “president” of the economic government on a 2½-year mandate.
Both Merkel and Sarkozy stressed their commitment to defending the common currency, the “foundation of our economic success and the symbol of the political unification of our continent.” There has to be “a stronger co-ordination of financial and economic policy” to protect the euro, Merkel said.
Among its concrete points, the letter calls on euro-zone countries to ratify by the end of September rules that would give new bond-buying powers to the euro area’s bail-out fund. The German and French governments also recommend that in future countries that do not take steps to correct their excessive deficits should have funds from the EU’s structural and cohesion funds suspended.
Sarkozy and Merkel also pledged to harmonise their countries’ corporate taxes in a move aimed at showing that the euro zone’s largest members are “marching in step” to protect the euro.
Guy Verhofstadt, leader of the Liberals in the European Parliament, said: “It is a quantum step towards a federal union that is needed if the euro is to be saved.”
But, posing the possibility of a two-speed EU, the German minister for foreign affairs, Guido Westerwelle, has said that any member-state that doesn’t implement the Franco-German plan “shouldn’t be allowed to stop the rest” from doing so, and that “there should be more differentiated co-operation”—which could suit Ireland very well indeed.