France and Germany want to give more sovereignty to the EU so that the ECB can buy massive debt

France and Germany want to give more sovereignty to the EU so that the ECB can buy massive debt

  • This is published on Sunday by the German and French press.
  • The German Chancellor, Angela Merkel, has given its arm to twist in the aspect of the debt purchase of the BCE, something to which until now it had been denied.
  • The French president will present part of the ideas of the reform of the EU Treaties this Thursday in Toulon (France).
  • The new euro pact would be an agreement between individual countries and not a treaty that the Twenty-seven would have to ratify.
  • This pact would force a strict control of national deficits and sanction supranational budget supervision.
  • Who is who in the European debt crisis.
  • The keys to the debt crisis | Chronology of the crisis.
Euro

Headquarters of the ECB in Frankfurt. Kai Pfaffenbach / Reuters

Paris and Berlin prepare, in their announced joint proposal of reform of the Treaties of the European Union (EU), a greater cession of sovereignty , with a reinforcement of the intergovernmental cooperation, according to informed this Sunday Le Journal du dimanche .

French President Nicolas Sarkozy will present part of the ideas he negotiates with German Chancellor Angela Merkel next Thursday in Toulon (south of France), in a speech explaining that the European Commission should have “new supranational powers “

The newspaper, quoting government sources without identifying them, says that Sarkozy will defend the reform of the Treaties that he and Merkel advanced last Thursday in Strasbourg that they will present to their community partners before the European Council on December 9.

 

On the other hand, the German press reported on Sunday that the new euro stability pact negotiated by Berlin and Paris will pave the way for the European Central Bank (ECB) to buy debt in a massive way , something that until now has been had denied the German chancellor, Angela Merkel. The details of this new pact (which would create a “club of the supereuropeans” or a “coalition of savers”, according to the German newspaper Die Welt am Sonntag ) could be known in part next week and be revealed in full at the summit of EU leaders next December 9 in Brussels.

Role of the European Commission

Regarding this reform of the role of the European Commission , the Journal du dimanche states that EU leaders must request it and that national parliaments “will maintain the initiative of the efforts that will have to be reached”. The newspaper adds that Sarkozy will refrain from mentioning the term “federalism” for the new architecture that comes out of the reform of the Treaties that Paris and Berlin will propose and that will be spoken rather of “a reinforcement of the intergovernmental” .

The European press points out that a reform of the European treaties would take at least a year to enter into force. The source also adds that this “loss of sovereignty” of the Member States has already caused differences within the French Government and that the Foreign Minister, Alain Juppé, has expressed his opposition to the countries’ budgets being submitted to the approval of an intergovernmental conference.

The sources of the French newspaper estimate that the procedure to reach that state that will be proposed ” will be long, the Elysium counts it in years”.

Purchase of massive debt

The subscribers of the new pact in which the ECB could buy massive debt, which would be an agreement between individual countries and not a treaty that the Twenty-seven would have to ratify, would force a strict control of national deficits and sanction a supranational budget supervision. “This will demonstrate their determination to tackle the debt problem quickly and comprehensively,” says the publication Die Welt am Sonntag .

In return, the signatories would have the permanent support of the ECB which, maintaining its independence but willing to support countries committed to fiscal consolidation, would act decisively in the debt markets to keep interest rates on its sovereign bonds low. . “After these (adjustment) measures, there should be a majority within the ECB ready to make more forceful interventions in the capital markets,” a German government source told the newspaper.

“The ECB will help”

Apparently, the European monetary authority has already been probed about its position with respect to this new pact negotiated in secret by the Governments of France and Germany and that, despite the diffusion in German media, has not been officially confirmed.

In this regard, an unnamed ECB member added to the Die Welt am Sonntag that “if politicians have problems while taking a truly comprehensive step, then the ECB will come into play and help .”

The reasons for the new pact

The reasons for Merkel and French President Nicolas Sarkozy to promote this new agreement (which somehow bypasses the European Commission) are the need to act quickly and to avoid the blockages of individual countries . The sources consulted by the German newspaper pointed out that a reform of the European treaties would take at least a year to come into force , when this new way could be ready for January or February 2012.

Germany and France are not willing to wait for unanimity from all EU countries If this stability pact were to be negotiated through the EU rather than as an agreement between countries, it could be embarrassing for one of the 27 countries (even if it is not in the EU). Economic and Monetary Union) refused to ratify it.

“Germany and France are not willing to wait for unanimity from all EU countries,” says the publication, which recalls the nervousness installed in the markets and the growing problems of countries such as Spain and Italy, but also France and Germany, to place your bonuses.

Furthermore, with this step, the reluctance of some countries to commit themselves more effectively to fiscal consolidation and to European fiscal integration, a need according to Merkel and Sarkozy, can be nullified.

Among the countries that have so far been most critical of the possibility of greater fiscal cohesion in the EU, the United Kingdom stands out.

The German Chancellor seems to have given his arm to twist with respect to the role of the ECB due to increased pressure from other partners in the eurozone and other countries such as the United Kingdom and the United States, and their opposition to the other possible exit to The crisis: Eurobonds.