BRUSSELS (Reuters) - As Greece threatens new shocks for the euro zone, EU chief executive Jean-Claude Juncker and four other top EU officials have laid out a vision for the common currency involving tighter control from Brussels.
In a report to be published on Monday, in cooperation with the heads of other EU bodies, the European Commission president also proposed help for states in distress.
The report recommended governments back modifications in procedures over the next two years and set out longer term ideas that could be adopted in new treaty obligations within the next decade.
Despite the crises of the past years, as governments unable to devalue national currencies have struggled to manage their finances amid global recession, the report began with the phrase: “The euro is a successful and stable currency.”
However, “quick fixes” to the problems now needed overhaul, especially in view of high unemployment, to ensure the euro - more than a currency but a “political and economic project” - had a “lasting, fair and democratically legitimate basis”.
A need for economies and budgets to converge would “inevitably involve sharing more sovereignty over time”, the report added.
One ultimate outcome could be a “euro area treasury”, although the report stressed it did not foresee “stabilizing” cash transfers going permanently to certain states, nor seek to use them to equalize incomes among rich and poor countries.
National leaders, who commissioned the report last year, will have a first chance to discuss it at a summit on Thursday and Friday that may be dominated by efforts to prevent Greece defaulting on its debts and losing access to the euro.
Differing views on the report are to be expected, though it contains elements likely to appeal to various parties.
It may please Germany by calling for tougher discipline on countries, like France and Italy at present, that fail to meet budget criteria.
But it also says that states running persistent trade surpluses, such as Germany, should adjust them. And it calls in vague terms for some shared fiscal resources to help countries in difficulty, an issue on which German Chancellor Angela Merkel has been wary.
In the short term, it recommends quickly setting up national competitiveness authorities, possibly on existing Dutch and Belgian models, that would press governments to pursue policies that would help productivity. It called for a greater stress on promoting employment and sustainable pension systems as part of a more “forceful” use of annual EU reviews of national budgets.
It also calls for measures to strengthen cooperation in avoiding the kind of banking crises that sucked in government cash in recent years. One measure it recommended taking within the next two years was creating a European Deposit Insurance Scheme to share risks among EU states.
One element of any tightening of euro zone coordination will be dealing with Britain, the main EU economy set on keeping its own currency. Prime Minister David Cameron has made guarantees of Britain’s access to the EU single market without euro membership a condition for him to call on voters to remain in the bloc at a referendum he will call by the end of 2017.
British officials have said they support tighter integration of the euro zone and would like new terms for London included in changes to treaties on the subject. But Juncker’s timeline makes clear that treaty change is not on his agenda until after 2017.
However, the preamble to the report underlined that euro zone integration should not harm the single market in any way.
“Completing Europe’s Economic and Monetary Union” is known as the Five Presidents Report, drafted by Juncker with European Central Bank chief Mario Draghi, European Council President Donald Tusk, European Parliament speaker Martin Schulz and Jeroen Dijsselbloem, the chair of euro zone finance ministers.
Additional reporting by Jan Strupczewski and Francesco Guarascio; Editing by Tom Heneghan