Germany's Schaeuble advocates leap in euro integration

ABU DHABI Tue Oct 16, 2012 11:54am EDT

Germany's Finance Minister Wolfgang Schaeuble speaks during a news conference at the annual meetings of the International Monetary Fund (IMF) and the World Bank Group in Tokyo October 13, 2012. REUTERS/Issi Kato

Germany's Finance Minister Wolfgang Schaeuble speaks during a news conference at the annual meetings of the International Monetary Fund (IMF) and the World Bank Group in Tokyo October 13, 2012.

Credit: Reuters/Issi Kato

ABU DHABI (Reuters) - German Finance Minister Wolfgang Schaeuble has called days before an EU summit for a leap forward in European integration, saying the bloc needs a new commissioner with power over budgets and reform of European Parliament decision-making.

Such reforms would accelerate the trend towards a two-speed Europe whose inner core would be the euro zone, spurred towards closer union by its three-year-old sovereign debt crisis.

Schaeuble, a long-time advocate of closer EU integration who is not shy about voicing his personal views, said he had spoken with Chancellor Angela Merkel about his proposals and that she was "somewhat more cautious".

"We must now make bigger steps in the direction of a fiscal union," Schaeuble told reporters on his way back from a trip to Asia. "We must use this chance."

Some of Schaeuble's ideas are likely to stir unease even within the euro zone.

He said a new "currency commissioner" should have the power to reject national budgets that were not in line with the bloc's strict fiscal rules, without specifying whether such a figure should have the power to impose penalties.

The model for the position would be the EU's competition commissioner, who Schaeuble said was "feared in the whole world".

He also called for more flexible voting arrangements in the European Parliament to accommodate closer integration between euro zone states.

European officials are looking for ways to boost the democratic legitimacy of a closer union, but have run up against the dilemma that the European Parliament includes countries from outside the euro zone.

"In the European Parliament lawmakers only from countries directly affected by a given issue should vote on it," Schaeuble said.

Such proposals could struggle to win acceptance in countries such as France, reluctant to surrender more sovereignty to EU institutions, while economies such as Greece, reeling from German-backed austerity programmes, will be wary of entrenching the power of outsiders to run their financial affairs.

A previous proposal from Schaeuble for a "Sparkommissar", or savings commissioner, was quietly dropped after it stirred fury in recession-mired Greece and got a cool reception from Germany's other European partners.

UNITING EUROPE WITHOUT UK

Schaeuble's proposals coincide with a British decision to pull out of a raft of EU law-and-order legislation, a move that has pleased the influential anti-EU wing of Prime Minister David Cameron's Conservative Party but has put London on a collision course with other member states.

"Britain itself must decide whether it wants to ride along with Europe or stay behind on the platform," said Wolfgang Krichbaum, head of the German parliament's Europe committee and a member of Merkel's center-right Christian Democrats.

Krichbaum said Schaeuble's proposals did not go far enough, adding that the currency commissioner should be able to impose penalties on recalcitrant countries and that other commissioners should also have greater powers than at present.

Addressing German employers in Berlin on Tuesday, Merkel said Germany did not aim to create new divisions in Europe in pressing for greater fiscal and political integration.

"We do not want to split Europe. Everything is being done so that any country which wants to take part in additional measures of integration can join us," she said, adding that the euro zone itself was by no means limited to its current members.

Schaeuble said he wanted EU leaders to discuss his ideas at this week's Brussels summit, adding that they could launch a 'convention' by December tasked with drafting a new treaty.

Merkel has previously said she would like the EU's December summit to agree a date for the start of a convention.

The idea recalls the 100-plus strong gathering of EU lawmakers set up in 2001 - inspired by the Philadelphia Convention that led to the adoption of the U.S. federal constitution - charged with preparing a European charter.

The document that emerged was rejected by French and Dutch voters in 2005 and a watered down version ended up forming the basis of the EU's Lisbon Treaty, which is in force today.

Many member states, recalling the lengthy disputes and setbacks that preceded the Lisbon treaty's entry into force, are reluctant to embark on another process of institutional reform.

But Germany believes a much closer fiscal and political union is needed to ensure the success of painful economic reforms and the long-term survival of the euro currency.

Schaeuble's ideas go further than proposals drafted in the summer by the presidents of the European Commission, the European Council, the European Central Bank and the Eurogroup which envisage a treasury for the euro zone as the final stage of a fiscal union they expect to take years to build.

"We need a lasting solution," Schaeuble said.

(Additional reporting by Andreas Rinke, Writing by Gareth Jones, Editing by Noah Barkin/Ruth Pitchford)