GERMAN FINANCE minister Wolfgang Schäuble has denied reports that Berlin and France will create a “coalition of the willing” inside the euro zone if EU members reject binding budgetary rules through treaty change.
Rather than convince the EU’s 27 member states or wait for the euro zone 17, Welt am Sonntag newspaper reported yesterday that Berlin and Paris are prepared to create a new “stability club” of eight to 10 members.
Mr Schäuble denied there was such a plan yesterday, saying: “We want to solve these things within the treaties.”
Officials in Berlin said the proposal for an avant garde fiscal union would give members, in exchange for central budgetary oversight, preferential access to ECB liquidity.
“After these measures, there is likely to be a majority inside the ECB in favour of greater intervention on capital markets,” said an unnamed government official to the newspaper.
Explaining their thinking, officials in Berlin draw parallels with the Schengen agreement allowing passport-free travel in continental Europe. It began as intergovernmental co-operation before being anchored in EU treaties.
Last week in Strasbourg, French and German leaders insisted that a package of tight budgetary rules is the only way to end the era of debt-fuelled politics and market nervousness.
By flagging their proposal now, Berlin and Paris are stepping up the political brinkmanship ahead of next month’s summit to discuss measures for closer EU budgetary oversight.
A Franco-German idea for a euro zone “coalition of the willing”, which Welt am Sonntag claimed could be presented as early as this week, is just one of many proposals on the summit table.
European Council president Herman Van Rompuy will present proposals to bolster economic co-ordination in the euro area and final conclusions by next March or June.
He has said that some of his proposals may involve “limited” changes to the EU treaty.
A German government spokesman declined to comment on the “stability club” proposals yesterday, saying Berlin remain committed to limited treaty change.
A Berlin official added that it was “not Berlin’s ambition” to see the euro zone split in two.