When it comes to #Eurozone reform, the new @EU_Commission team (👋@VDombrovskis @PaoloGentiloni) should focus on two parallel tasks:
- build political consensus
- prepare the next downturn
My #NewBeginnings text in the link, main points in a short thread:
delorsinstitut.de/en/all-publica…
1/ The last Commission did not manage to foster a consensus among member states about the right direction of Eurozone reform. Indeed, it arguably did not have a coherent vision itself of where it wanted the Eurozone to go.
2/ Instead, it resorted to making a number of proposals (EDIS, EISF, RDT, SBBS; yes, they all have catchy acronyms) that tried to alleviate political constraints by offering technical fixes without solving the underlying disagreements.
3/ This method has largely failed to produce substantial outcomes but at the same time has consumed massive amounts of political capital. The debate on the Eurozone budget is a good example for this. It is by far not only the COM's fault; but it seems we need a new method.
4/ So the new COM should shift gears:
First, it should make sure there is a coherent Commission position on Eurozone reform - no easy task given that the new setup is largely the old.
Second, it should focus on building stable political consensus among member states.
5/ This will require a new process beyond the Eurogroup - most probably involving the heads.
Third, the COM should refrain from making legislative compromise proposals before the political groundwork has been completed - e.g. on an unemployment reinsurance and on SGP reform.
6/ Ideally, focus would be on political consensus building now. But preparation for next downturn cannot wait. @Lagarde told us many times to fix the roof while the sun was shining - now it has started to drizzle and we should make sure that the roof will not collapse later on.
7/ Therefore, COM should have three additional immediate priorities:
- Improve the EZ budget aka BICC as much as possible to make it both flexible and scalable
- Ensure resolution framework in banking union is credible
- Prepare the playbook for a joint fiscal response.
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