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1/ 🇫🇷 and 🇩🇪 have agreed yet another paper on the Eurozone budget. But rather than giving the debate orientation, it just narrows the road further and will make it even harder to build something useful. Here is why:
2/ The instrument is supposed to make the euro function better by supporting “competitiveness” and “convergence”. Now, if we don’t have a common understanding of these two objectives, we won’t be able to build an instrument that has any coherence.
3/ A good D-F paper would have provided a consistent frame here. But on this: rien, nix, nothing. The paper has no underlying shared idea how a Eurozone budget will make the euro function better - probably b/c there is no such shared idea.
4/ Instead, the paper directly jumps to a rather confusing and detailed discussion of instruments: Main elements are spending on reforms and investment in the broadest possible terms financed by ex-ante fixed contributions by member states.
5/ It’s hard not to come to the conclusion that this will result in an exercise where essentially countries will put in x and will expect the same sum back in return for reforms/investment at home.
6/ This would be a duplication of the functioning of the EU budget - and this would be a pity because this whole exercise provides the unique chance of building something that works differently than the EU budget so that we have a tool at hand for the future.
7/ So in sum, while the paper fails to give meaningful guidance in terms of underlying objectives, it narrows down the design options in the wrong way.
8/ One last thing seems striking: The paper is very close to the German position paper from the beginning of this week. Goes to show that French ambition seems to have dropped to basically zero. Not a good sign for the reform agenda as such.
