Scholz calls for radical reform of EU voting, defence and fiscal policy

Chancellor Olaf Scholz has urged Germany’s neighbours to back radical reform of European Union voting, defence and fiscal policy to future-proof the union against Russia and other systemic rivals.

In a nod to how often Berlin raised neighbours’ hackles over reforms in the recent past, Mr Scholz promised a debate “without prejudice, lecturing or blame games” and greater openness from Germany on the sensitive issue of shared EU debt.

In his most ambition address to date on EU policy on Monday in Prague, Mr Scholz cited the motto of 1989′s peaceful Czechoslovakian revolutionaries — “When if not now? Who if not us?” — to frame Russia’s invasion of Ukraine as a watershed moment for the EU.

A reformed EU could better resist Russian attempts to return Europe to previous centuries of “wars of occupation and totalitarian excesses”.

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“Our Europe is an active rejection of imperialism and autocracy, the currency of the European Union is not supremacy or subordination,” said Mr Scholz to an audience at Charles University in Prague. “It is precisely this Europe that is anathema to Putin because it doesn’t fit into his world view in which smaller countries are forced to submit to a handful of major European powers.”

After ad hoc responses to the refugee crisis and the Covid-19 pandemic, Mr Scholz urged a leap beyond ad hoc, sticking plaster solutions on migration, defence co-operation and fiscal policy. Pre-empting protest from other capitals, Mr Scholz said his Prague proposals were “food for thought, not ready-made German solutions”.

To prepare the EU for a further wave of enlargement, “swift and pragmatic action” is needed in particular on shifting from unanimity towards decision-making by majority votes — in particular on foreign and fiscal policy.

“Where unanimity is required today, the risk of an individual country using its veto and preventing all the others from forging ahead increases with each additional member state,” said Mr Scholz.

“Anyone who believes anything else is in denial about the reality of Europe.”

Pre-empting protest from Poland and other member states, who see in majority voting a risk of greater German dominance, Mr Scholz said the change would, at times, work against Germany’s interests. But preserving the status quo was worse: forcing a multi-speed Europe, a “confusing tangle and proliferation” of “opt-ins and opt-outs”.

“This would be an invitation to all those who want to bet against a united, geopolitical Europe and play us off against each other,” he added.

The German leader reiterated calls for reform of EU bureaucracy, in particular sharing portfolios among member states’ commissioners rather than subdividing responsibilities still further for each new member state.

He said he was open to treaty change — but only on a “form follows function” basis where proposed changes offer clear gains.

As well as more ambitious co-operation on future projects, such as a shared space for data generated by connected vehicles, Mr Scholz called for an EU defence minister council to oversee closer co-operation between members of a European “coalition of the willing” on joint weapons procurement and development as well as foreign missions.

Securing the EU’s future will also require resolving long-running, energy-sapping rows over fiscal and migration policy.

He proposed a fresh push for migration agreements with non-EU countries: issuing visas and work permits for people to assist in airports and care homes once their homelands accept back more of their failed asylum seekers and illegal migrants.

In his clearest signal yet, Mr Scholz called the recent pandemic recovery fund as a “turning point” in common EU fiscal policy.

“We agreed to invest together, ideology gave way to pragmatism, we should take that as our guide when it comes to developing shared rules,” said Mr Scholz, breaking with predecessor Angela Merkel’s insistence the fund — co-financed by joint EU-raised debt — was a one-off venture.

Aware of Germans’ sensitivity to debt-sharing among EU member states, Mr Scholz said binding common rules on debt and debt sustainability were crucial to make such a shift “politically marketable” in all member states.

Finally, after years of stand-off over whether reforms in Hungary and Poland have undermined the rule of law, Mr Scholz insisted it was “sensible” to link EU payments to members meeting basic EU standards.

As the row flares up once more with Warsaw, Mr Scholz said “we should give the Commission new ways to start infringement procedures” in their rule-of-law rows with Warsaw and Budapest.