The European Council: defining EMU



This week's European Council will have another go at trying to agree on a definition of a 'genuine' Economic and Monetary Union (EMU). In June the leaders refused to accept the first paper from their President Herman Van Rompuy on the matter, and asked for more work to be done. Now they have in front of them an interim report (12 October) from Van Rompuy which indeed advances the argument for more European integration but which still ducks the vital question of how this more united Europe might best be governed.

The European Council is committed to taking some firm decisions on Van Rompuy's final report in December. Whatever happens this week, there's a long way still to go, especially on the fourth of the building blocks which is euphemistically entitled 'democratic legitimacy and accountability'. While the role of the European and national parliaments at their respective levels wins a creditable mention, nothing is said about the executive authority needed to run the more integrated fiscal union towards which, bleary eyed, we stumble.

Unofficial statements about the nature and timing of political union add little coherence to the debate. Wolfgang Schaüble's (16 October) call for a more autonomous Währungskommissar to run the eurozone excited not least the European Commission who seem to believe that they already have, in Olli Rehn, just that. The Germans love to annoy Commission President Barroso, just as they seldom resist the temptation to tease the French about political union, believing that Paris will never in the end accept the transfer of sovereignty on the scale needed to set up a 'genuine' EMU. It is not only Berlin which has not yet got the measure of the new government of François Hollande.

Interim Van Rompuy, meanwhile, merely speaks of the need, in 'a fully-fledged integrated budgetary framework' to establish 'a Treasury function with clearly defined fiscal responsibilities'. Such a thing must, of course, be run by somebody with the powers of a government minister or Treasury Secretary who needs to be appointed by and remain accountable to the bicameral legislature of the European Parliament and Council of Ministers. Van Rompuy III, in December, must open the debate not only about the fiscal responsibilities of the eurozone treasury but also about its political responsibilities. Faced thus with a credible discernible government at the EU level, parliamentary powers will surely rise to the occasion.

Meanwhile, back at the European Parliament, we try to make sense of the Commission's controversial proposals for banking union. The main difficulty is to guarantee the independence of the European Central Bank in monetary policy while turning it into the lynchpin of a single supervisory mechanism for all, or most, of Europe's banks. The legal complexities are manifest. Less exposed is the risk that Europe's bankers are already leaps ahead of the likely new EU regulation which will eventually emerge from the Brussels legislative factory.

Most of those bankers are based in the City of London. Which fact should bring us on to explaining British government policy on banking union, fiscal union and political union. It is here, however, that my powers of deduction fail.

Andrew Duff's latest publication is 'On Governing Europe' is published this month by Policy Network.

Read more on:

Latest from ECFR