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Docking EU funds not the only way to ensure member state compliance - Juncker

BERLIN (Reuters) - European Commission President Jean-Claude Juncker said on Thursday he was against a German proposal to link future EU funds to the condition that member states stick to rule of law principles.

FILE PHOTO: European Commission President Jean-Claude Juncker chairs a meeting of the EU executive body in Brussels, Belgium May 10, 2017. REUTERS/Francois Lenoir

With the EU debating reform of the bloc after Britain leaves it, Germany’s government has set out proposals to freeze access to EU funds for countries that fail to meet the EU’s rule of law standards, according to a document seen by Reuters.

Asked during a Europe conference in Berlin if he backed the German proposal, Juncker said: “I’m of the opinion that one should not do that.”

Such a procedure would be “poison for the continent”, Juncker said, adding that the European Commission had other ways to make clear that solidarity was not a one-way street.

He also said that the most urgent task currently facing the EU was completing the jointly agreed capital market and banking union by 2019 and that deepening euro zone cooperation should come later.

“I think we should not focus excessively now on deepening the monetary union,” Juncker said, adding that proposals presented by the European Commission on Wednesday for a joint budget and a joint finance minister of the euro zone were mainly meant to start a discussion.

Before creating new institutions and new roles, the EU member states would have to agree on their exact tasks, he said. “You can’t just put a finance minister out there out of the blue, you also have to clarify what he should do,” Juncker said.

Juncker repeated that Europe had to make clear to the United States that quitting the Paris climate agreement was not a straightforward process, adding that fully leaving the deal would take three to four years.

U.S. President Donald Trump is expected to announce on Thursday his decision whether to keep the United States in the global pact to fight climate change, as a source close to the matter said he was preparing to pull out of the Paris accord.

Juncker said the European Union would have to take the lead role in fighting climate change together with other allies if the United States pulled out.

“We then would have to try to find common ground with the Chinese,” Juncker said.

Speaking at the same event, Germany’s centre-left candidate for chancellor Martin Schulz said that if Trump quit the climate pact, U.S. producers would gain a competitive advantage over their European rivals. The EU would have to respond to market distortions of this kind, he added.

“If Mr Trump wants to leave the climate pact, then we must talk openly about trade relations and market distortions,” Schulz said, suggesting that backsliding on environmental standards could harm U.S. access to the world’s largest market.

Schulz is the centre-left Social Democratic Party’s candidate to succeed Chancellor Angela Merkel in September elections. His party is currently running second in polls behind Merkel’s Christian Democrats.

Reporting by Michael Nienaber and Thomas Escritt; Editing by Catherine Evans