1/The election of @_A_K_K_ , the announcements of @EmmanuelMacron, the possible deal between @EU_Commission and Italy - what does this all mean for Eurozone reform?
In short: Nothing. Because the ship will sail tomorrow and will not come back any time soon.
A thread pre-#EuCo:
In short: Nothing. Because the ship will sail tomorrow and will not come back any time soon.
A thread pre-#EuCo:
2/ The Euro Summit will sign off tomorrow on next steps in 3 areas of Eurozone reform: Banking union, crisis management, and fiscal policy. Rather than kicking the can down the road again, it will define the political perimeter in each of these areas for the foreseeable future.
3/ On banking union, the summit will adopt the rules for using the backstop for the Single Resolution Fund and the conditions under which the backstop can see the light of day before 2024. The ESM treaty will be changed accordingly in the near future.
4/ On crisis management, the ESM treaty will also be changed to reflect a slight change in the division of labour between COM and ESM staff. It will also be amended to include new language on CACs and the summit will decide to toughen conditions to get precautionary assistance.
5/ Finally, it probably will decide to put some form of Eurozone budget in the EU budget - a tool that works almost exactly like the EU budget and that can only foster "convergence and competitiveness" but cannot have stabilization as an objective.
6/ These steps clearly fall short of what would be required in each area to properly prepare the Eurozone for the next crisis. That wouldn't be a problem if there was space for future progress - after all, EU policy-making is a slow and painful process that advances step by step.
7/ But this is different: Tomorrow's decisions close a reform cycle for good. Two reasons for this: First, the ESM treaty will only be changed once in the coming years. What is not included in the political perimeter tomorrow won't be in anytime soon.
8/ Second, there is now a direct link between any form of fiscal capacity/Eurozone budget and the MFF. Tomorrow sets the upper ceiling of what can be achieved on this front in the MFF negotiations - what is out tomorrow will not come back in later. Next chance is then 2027.
9/ This has two major implications: First, any further debate within these three areas in the coming years will be about technical refinement within the political decisions, not about reopening the big political questions.
10/ Second, some issues will be politically over tomorrow (backstop, ESM reform, budget), but others will not (EDIS, fiscal rules). This also means it will become nearly impossible to strike any form of grand bargain on the remaining ones - there is simply nothing to trade left.
11/ So where does this leave us? There was a chance to get make real progress this time - the famous "window of opportunity". That is now shut and it will not reopen soon. We are back to the old strategy: Find solutions when the crisis hits. Imho, a pretty dangerous one.
