When Jean-Claude Trichet named last June for the creation of a European finance ministry with power over national budgets, the idea seemed fanciful, a distant dream that would take years or even decades to comprehend, if it ever came to be.
One year later, with the euro zone’s debt crisis threatening to tear the bloc apart, Germany is pushing its partners for precisely the kind of giant leap forward in fiscal integration that the now-departed European Central Bank president had in thoughts.
After falling short with her “fiscal compact” on budget discipline, German Chancellor Angela Merkel is pressing for a lot much more ambitious measures, including a central authority to manage euro location finances, and major new powers for the European Commission, European Parliament and European Court of Justice.
She is also searching for a coordinated European approach to reforming labor markets, social security systems and tax policies, German officials say.
Till states agree to these steps and the unprecedented loss of sovereignty they involve, the officials say Berlin will refuse to think about other initiatives like joint euro zone bonds or a “banking union” with cross-border deposit guarantees – steps Berlin says could only come in a second wave.
The aim is for EU leaders to agree to develop a road map to “fiscal union” at a June 28-29 EU summit, where top European officials like European Council President Herman Van Rompuy will present a set of initial proposals.
New President Francois Hollande rode to victory in a French election last month promising new steps to enhance growth. At the EU summit later this month, he and other leaders had been expected to gang up on Merkel, pressing her for new growth-enhancing measures.
But after a series of modest concessions from the German leader, a loose consensus on a growth approach already appears to have been reached weeks before the leaders meet.
Will they have their new EU order by the end of the year?
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The Extinction Protocol: 2012 and beyond June 3, 2012 – EUROPE – When Jean-Claude Trichet called last June for the creation of a European finance ministry with power over national budgets, the idea seemed fanciful, a distant dream that would take years or even decades to realize, if it ever came to be.
All 17 countries already have a common monetary authority, the European Central Bank . A fiscal integration would aid the euro zone’s members in multiple ways, Rajoy said, including the management of sovereign debt and tax policy. Speaking at a conference in the Catalonian city of Sitges, Rajoy alluded to Spain’s current battering by the gusts of…