GERMAN CHANCELLOR Angela Merkel is coming under domestic pressure to push for a reweighting of ECB voting rights to reflect euro zone member population size.
Members of her ruling Christian Democrats (CDU), alarmed that “southern Europeans” have the upper hand on the ECB board, are formulating a motion to end the one-country one-vote system at next week’s party conference in Leipzig.
Berlin and Paris denied yesterday that they are discussing plans for a two-speed integration of euro zone economies.
“We only have one goal, that is to bring about a stabilisation of the euro zone in its current form,” said Dr Merkel, saying the current political goal was to “make the euro zone more competitive and reform budgets”.
“We believe firmly that this common euro area is capable of winning back full credibility, including every single country.”
Reuters stood by its report yesterday that cited unnamed EU officials as saying talks about closer integration were proceeding – even if this meant a core group leaving behind the rest of the euro zone.
Officially and unofficially, German officials denied strenuously there was any such discussion. “There is no plan to create a smaller euro zone, not even secretly,” said one well-placed Berlin source, on condition of anonymity. “We cannot rule out that some parliamentarian somewhere is talking about it and giving the wrong impression, but even strategically, there is no plan for that and no talks.”
Dr Merkel and French president Nicolas Sarkozy broke a taboo in Cannes last week when they raised the prospect of Greece leaving the euro zone. This was followed by a strongly pro-federalist speech by Mr Sarkozy in which he said there would “clearly” have to be a two-speed Europe.
Mr Sarkozy said this week he expected a “two-speed” Europe to emerge from the debt crisis, with a “federal” core of states from the single currency area and non-euro states forming a looser “confederation”. The French leader did not say whether he envisaged the “core” single currency group becoming smaller than 17, but throughout the debt crisis Paris has pushed for closer co-operation between euro zone members.
It sees the smaller 17-state club as a more cohesive forum where its own influence, reduced by enlargement of the EU in the past decade, is amplified. However, Paris denied reports that a Franco-German initiative to give effect to this was in preparation, however.
Meanwhile, Dr Merkel will face pressure from her backbenchers to push for reforms of the euro zone and the ECB at next week’s CDU party conference in Leipzig.
One party conference resolution states that a member state “consistently unwilling or unable to stick to the rules that come with a common currency . . . can voluntarily leave the euro zone without leaving the European Union”.
Another resolution calls for reform of the voting rules where all euro zone members, regardless of population size, have one vote on the ECB’s governing council. In addition, the motion calls for any new voting formula to make it impossible for the executive board to be overruled.
The ECB governing council comprises 17 national central bank governors as well as six ECB executive board members. They all have an equal vote when the central bank decides on interest rates or other monetary policy matters, with the ECB president having a casting vote.
Jürgen Hardt, the CDU MP behind the voting resolution, said the “independent culture” of the Bundesbank was “being held to ransom” under current ECB rules.
“I think this motion will find a broad majority and will feed into the catalogue of questions surrounding treaty change that Chancellor Merkel will bring to the table in Brussels,” said Mr Hardt, a member of the Bundestag European affairs committee.
“The assumption was that the euro zone would bring about convergence, but the current ECB rules are driving members apart.”
Last week’s ECB interest rate cut under its new president, Mario Draghi, has revived questions in German circles about whether an Italian-lead ECB will maintain the price-stability ethos of the Bundesbank or loosen the inflationary focus.
CDU members are divided over the ECB resolution. Finance minister Wolfgang Schäuble is opposed, while others suggest it has been approved merely to allow backbenchers let off steam at the euro zone crisis. Still others insist it is a serious initiative.
“This resolution could have been blocked if the leadership didn’t want it, but they want clearly the discussion,” said one CDU party official. “Merkel will be instructed by the party conference to use her diplomatic powers of persuasion to find a voting compromise, particularly with smaller euro zone members. They will have to see that a rule change is necessary because the current crisis couldn’t have been foreseen. If it had, we wouldn’t have joined the euro on these terms.”
Changing the statutes of the ECB to alter the voting rights would require the consent of all 27 EU members.