European officials call for closer integration
The Associated Press
Posted: Jun 26, 2012 10:54 AM ET
Last Updated: Jun 26, 2012 10:53 AM ET
Top European officials have called for countries that use the euro to grant an international authority the power to demand changes to their national budgets, as part of a grand vision to save the currency and strengthen the union.
The plan published Tuesday on the European Council website was drawn up by the "gang of four" European presidents: Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, Eurogroup President Jean-Claude Juncker and European Central Bank President Mario Draghi.
The four officials' proposal appears aimed at encouraging Germany to accept closer fiscal integration, such as jointly issued eurobonds, which spread debt risk across the eurozone and would lower the risk of individual states needing a bailout.
Germany opposes a quick adoption of eurobonds because it would be exposed Berlin to more potential costs and reduce incentives for weaker states to fix their finances. A central control over those finance policies may reduce Germany's fears.
"Greater pooling of decision-making on budgets...(and) effective mechanisms to prevent and correct unsustainable fiscal policies in each member state are essential," they wrote in the report to be debated at a summit of EU leaders Thursday and Friday.
"Toward this end, upper limits on the annual budget balance and on government debt levels of individual member states could be agreed in common."
If a country were to flout budget rules "the euro area level would be in a position to require changes."
It is not clear how much appetite eurozone governments have for surrendering further control over their budgets to Brussels, although all agreed to abide by a three per cent deficit limit when they joined the single currency.
Plan short on detail
The plan proposes a "medium term" move towards eurobonds, as well as creating a banking union with a single authority that would insure banking deposits and have the power to shut or recapitalize banks directly, with help from Europe's permanent bailout fund.
Germany's deputy foreign minister quickly dismissed the eurobond idea.
"By beginning with pooling of debt, we're heading toward a dead end," Michael Link said in Luxembourg, repeating a sentiment often expressed by Chancellor Angela Merkel.
The document is long on vision but short on detail, especially measures to address short term stresses that are threatening to shatter the single currency.
On Monday, Spain requested financial help to recapitalize its banking industry, and yields on Spanish and Italian government bonds are rising toward levels that forced the governments of Greece, Portugal and Ireland to seek bailouts.
But Spain and Italy are widely considered "too big to bail" — even for Europe's biggest and strongest nation, Germany.
"Standing still is not an option," Barroso told reporters Tuesday, discussing the plan.
"A big leap forward is now necessary."
At the end of the report, Van Rompuy volunteered to develop a "specific and time-bound roadmap for the achievement of the genuine economic and monetary union" by December.
Top News Headlines
- 2 men jailed in Dominican wedding fight return to Canada
- Two Canadian men who were detained in the Dominican Republic for nearly three weeks after a post-wedding fight broke out at a resort have returned to Toronto, the latest step in a drama that the wife of one of the men said was "like a scene from the movies." more »
- Senators call for 'zero tolerance' on harassment in RCMP
- The RCMP should amend its code of conduct to explicitly define and prohibit harassment, a Senate committee is recommending in a newly tabled report. more »
- Are e-cigarettes safe to puff?
- As electronic or e-cigarettes grow in popularity, some health advocates want them to be regulated. more »
- Most groups don't want return of Trudeau speaking fees
- Most of the 17 charitable and other organizations that have paid speaking fees to Liberal Leader Justin Trudeau during his time as an MP say they aren't interested in having their fees returned, despite Trudeau's offer on the weekend to reimburse any organization unhappy with his services. more »
Latest Business Headlines
- Tim Hortons being circled by Wall Street hedge funds
- At least two groups of American hedge funds have bought large chunks of Tim Hortons shares recently, a sign the activist investors want to push the company to make major changes to its business, or possibly give up some control over the company. more »
- Chrysler agrees to recall 2.9 million Jeep SUVs in U.S., Canada
- Chrysler avoided a showdown with U.S. government safety regulators Tuesday, agreeing to recall 2.7 million older Jeep Grand Cherokee and Liberty SUVs in the U.S. and 256,000 in Canada that could be at risk of a fuel tank fire. more »
- Leaders downplay reports of stalled Canada-EU trade talks
- Both Prime Minister Stephen Harper and his British counterpart, David Cameron, downplayed signs of trouble in the Canada-EU trade negotiations Tuesday, even as the European Union's spokesman suggested Canada hasn't shown enough "pragmatism and flexibility" at the table. more »
- Business jets dominate Bombardier's $2B in sales at air show
- Business jets dominated the aircraft orders announced by Bombardier on Tuesday, the second day of the Paris Air Show, accounting for most of the nearly $2 billion US worth of business that the Montreal-based company has done at the show — if all options are exercised. more »
- Crowdfunding websites trying to cash in on crowded field
- Success stories make it seem like crowdfunding websites drop cash from the heavens on to any deserving idea. But regulators and big banks are now taking a closer look at the controversial new field, Dianne Buckner writes. more »
Lang & O'Leary Exchange
The data on this site is informational only and may be delayed; it is not intended as trading or investment advice and you should not rely on it as such.
- Canadians in Dominican wedding fight freed from jail
- Huge ancient city at Angkor Wat revealed by lasers
- Montreal mayor resigns amid corruption charges
- TV chef Nigella Lawson's husband cautioned by police for assault
- Disabled woman's care before dying on bus still a mystery
- Student with bullied past, 'The Doorman,' graduates
- Parents of son 'brutally beaten' playing hockey want charges
- 'Standing man' inspires new, silent protests in Turkey
- G8 leaders agree to 7-point plan on Syria as summit wraps