Finance Ministers of Northern Member States Oppose ‘French Reforms’ of the Eurozone

Eight northern EU member states expressed their opposition this week to French proposals for eurozone reform after an agreement on a new government in Germany opened the way for negotiations on the issue, European media report.

The EU should avoid “far-reaching transfer of powers to the European level” if it wants to “regain public trust” after the financial crisis, the finance ministers of Denmark, Estonia, Finland, Ireland, Lithuania, Latvia, the Netherlands, and Sweden stated in a joint document published on Monday, according to EUobserver. Denmark and Sweden are not eurozone members.

Decision-making should remain firmly in the hands of member states on issues such as the use of the European Stability Mechanism (ESM), the fund for rescuing eurozone members, or the establishment of a European Monetary Fund (EMF) for future rescues.

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They emphasized that the strength of the euro depends primarily on “decisive measures at the national level” to comply with European rules on public debt and budget deficit, and these national measures “should take precedence over far-reaching proposals”.

They also believe that decisions on eurozone reform should be made in an “inclusive format” with the 9 countries that are not eurozone members and that any new initiatives “should be open on a voluntary basis to countries that are not eurozone members”.

The finance ministers of the northern states spoke out after the formation of a new government coalition in Germany, which opened the way for the start of serious negotiations on eurozone reform.

France called last year for “far-reaching” changes that would give European institutions greater powers in the area of the single currency, which would lead to, as French President Emmanuel Macron said, a Europe with “multiple speeds”. Proposals include a common eurozone budget under the control of the European Parliament and a common finance minister.

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German Chancellor Angela Merkel agreed to a less radical version in preliminary talks in January with the German Social Democrats (SPD), who will again govern with her Christian Democrats.

Merkel did not support Macron’s proposal for a eurozone budget, but is willing to go further than the northern members, believing that the future European Monetary Fund (EMF) should be a true European institution under the control of the European Parliament, rather than an intergovernmental body. European leaders will discuss this issue again at a summit this month.

The northerners also believe that the EU must continue with reforms despite more favorable economic conditions and that the priority should be the completion of the banking union and the single market.

The Commission Shares Many of Their Views

The European Commission responded on Wednesday that it shares many of their views.

– We welcome all contributions to the discussion on the Economic and Monetary Union. We see that there are many common points between our position and the position of the eight northern member states, said European Commission Vice-President Valdis Dombrovskis, according to France Presse.

Dombrovskis stated that the Commission agrees that discussions on EMU reform should be inclusive, meaning that all member states should participate, not just a small group or only France and Germany.

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He also agrees that strengthening crisis management instruments in the EU or eurozone should not replace necessary budgetary and macroeconomic measures. Strengthening the European Stability Mechanism and completing the banking union are also priorities for the EC, he added.

Regarding the banking union, he also believes that it is necessary to work simultaneously on reducing risks and sharing responsibilities for them.