Germany favours “more Europe, not less”

Until recently there was much reticence amongst European leaders to broach the subject of greater consolidation in Brussels of finances and power. However, at a Christian Democratic Union party meeting on Monday Chancellor Merkel said that Europe presently faced its “toughest hour since the second world war” and that “a radical change in thinking was needed in Europe to overcome the eurozone debt crisis”, according to the Financial Times. The radical change in thinking Chancellor Merkel was proposing is what she described as “more Europe, not less” – greater European integration.

Until recently Chancellor Merkel didn’t have the domestic political capital to make such proposals – more Europe has always been seen by the German populace as Germany bankrolling the “club-Med” states. However, as the reality of the eurozone crisis has hit the German public, it has become clear that there is no longer a choice: Germany must help its struggling European counterparts, knowing that if one fails the whole European project is at risk. So, now we are starting to see the beginnings of Germany’s quid pro quo.

Chancellor’s Merkel’s proposals (and her party) are numerous. Most notable was the proposal to introduce a new financial transactions tax – the so-called Tobin tax – in the 17-member eurozone. This would be a significant step towards providing Europe with a financial independence from its member states that it has not previously enjoyed. As well as this step towards fiscal union, members of the CDU included a radical political union reform proposal – the direct election by EU voters of future presidents of the European Commission. Also proposed was the consolidation of certain fiscal controls in Brussels – amongst other things the power to impose sanctions on countries that fail to meet agreed budget guidelines.

While Chancellor Merkel is reportedly for “more Europe not less”, the same cannot be said for Britain’s Prime-Minister David Cameron. He too views this crisis as an opportunity for reform of Europe and is said to support closer union within the 17-member eurozone that Britain is not a part of. He realizes that he doesn’t have a choice – Britain needs a strong eurozone as much as Germany. But in respect of the 27-member European Union which Britain forms a part of, his reform proposals stress deregulation and repatriation of power from Brussels to member states – apparently contradictory aims.

But while Britain remains a chicane in the road for Germany, it is unlikely to be a roadblock. As Prime Minister Cameron remarked this week at the London Lord Mayor’s banquet, if Britain wants to keep its seat at the EU negotiating table, it will risk becoming further removed from the Brussels power-base if the core eurozone group consolidates leaving it in the second-tier group of EU members. But if it doesn’t agree to German reforms, Germany may not be prepared to loosen the purse strings for its fellow eurozone members. Britain may not have much choice but to agree or leave the EU, and Prime Minister Cameron has made clear for now that leaving the EU is not an option.

Eye on Europe

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