Top eurozone finance ministers met in Paris yesterday in whirlwind efforts to ensure that a summit this week launches the EU toward far greater integration and stops debt contagion from Spain.
Ambition is high and tension is growing ahead of the Brussels summit tomorrow.
EU leaders want to give EU authorities more power over eurozone national budgets, and to establish central banking supervision across the single market, a top level report said.
A report drawn up by EU and eurozone leaders EU President Herman Van Rompuy, EU Commission President Jose Manuel Barroso, Eurogroup President Jean-Claude Juncker and European Central Bank President Mario Draghi proposes to move “over the next decade” toward greater centralized power for the “financial sector, for budgetary matters and for economic policy.”
In the report, Van Rompuy says: “The euro-area level would be in a position to require changes to [national] budgetary envelopes if they are in violation of fiscal rules.”
Barroso said in a speech that the dramatic shift being considered “should start with steps that can be taken immediately without a treaty change ... These would lead to longer term steps that may require such changes.”
Meanwhile, finance ministers from France, Germany, Italy and Spain were meeting in Paris with EU Economic Affairs Commissioner Olli Rehn. And Athens took a step forward, naming former banker Yannis Stournaras as the country’s new finance minister.
In France, French junior budget minister Jerome Cahuzac told BFM TV and RMC radio that Paris, like Berlin, Rome and Madrid, had to share sovereignty over its budget.
“This is what we are talking about, budget solidarity in Europe, which implies that not only that the French budget, but also the German, Italian and Spanish budgets be subjected to a review by all our partners,” Cahuzac said.
The 17-nation eurozone is struggling to convince markets it can get to grips with spreading crises. The latest blows were a downgrading of 28 Spanish banks as Madrid officially requested help for them, and Cyprus became the latest eurozone member to ask for financial aid.
A decision by the Moody’s agency to slash the Spanish banks’ ratings came just hours after Madrid made a formal request for up to 100 billion euros (US$125 billion) to bail out its banks.