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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FAZ reports that the federal president is consulting with the chancellor and the leader of the opposition on next steps if the coalition collapses.
Good moment to run you through the main options and steps that would follow if indeed it's over:
There are essentially two ways this could end. Lindner could just pull the plug. FDP ministers would resign from their posts. Or Scholz runs out of patience and asks the federal president to remove Lindner (and presumably also the other FDP ministers).
The government would have no majority in parliament anymore. But in Germany, you cannot force a chancellor or a government out of office by simple no-confidence vote. The Bundestag would need to elect another chancellor to do that. And there is no majority in sight for anyone.
Draghi hat seinen Bericht zur Wettbewerbsfähigkeit Europas vorgelegt - und natürlich konzentriert sich die Diskussion in 🇩🇪 sofort auf die Frage neue EU-Schulden ja/nein/vielleicht.
Warum das ein Fehler und dieser Bericht eine große Chance auch aus Berliner Perspektive ist:
Der Bericht ist zunächst eine ziemlich schonungslose Standortbestimmung der europäischen Wirtschaft im globalen Vergleich. Und Draghi sagt: Es sieht nicht gut aus. Als zentrale Gründe macht er fehlende Produktivität und mangelnde Innovation aus.
Außerdem nennt er die Herausforderungen durch Fachkräftemangel, hohe Energiepreise und notwendige Dekarbonisierung. Und eben die globale, teilweise unfaire, Konkurrenz. Klingt alles bekannt aus der deutschen Debatte? Eben.
The Draghi report has just dropped - and it is surprisingly good and low-bullshit.
My initial takeaways:
Such reports tend to be boring to read: Because the authors are mincing their words, because of too many cooks in the kitchen, because the "outside expert" is not really allowed to say what they want or do not know what they want to say.
The Letta report suffered from several of these ailments. The Draghi report suffers from none thereof. The man obviously knows what he wants to say and doesn't mince his words. The report is refreshingly low-bullshit, puts fingers in obvious wounds and largely avoids euphemisms.
The 🚦 agreement is actually pretty good news for a number of Eurozone files, including the fiscal rules and EDIS.
Here are the main bits:
1/ Most importantly, the text says that the fiscal rules can be "developed further" to reach three goals: Secure growth, safeguard debt sustainability and foster green investment. They should also become "simpler and more transparent, also to strengthen implementation".
2/ This is pretty big. No red lines here, but an open and constructive opening position for negotiations that can very well include a change to the rules themselves. It will be now up to the Commission and other member states to take up the offer that is in that text.
Das @_FriedrichMerz-Interview im @handelsblatt ist beeindruckendes Anschauungsmaterial, wie sich ein Teil der Konservativen im europapolitischen Wald verirrt hat und jetzt nicht mehr herausfindet.
Warum das ein Problem ist:
1/ Es geht mit dem klassischen Motiv los, dass man höllisch aufpassen muss, den faulen Südeuropäern (hier stv 🇮🇹🇪🇸) nicht ihr Hallodritum zu finanzieren. Dass gerade diese Länder die ambitioniertesten Pläne zur Verwendung der EU-Gelder vorgelegt haben, bleibt natürlich unerwähnt.
2/ Es geht dann weiter zu den Schuldenregeln. Hier räumt auch Merz ein, dass die Einhaltung für viele Länder schwierig wird. Und dann wird es spannend: Er drückt sich extrem wortreich um eine Antwort herum, ob man die Regeln denn nun wirklich so einhalten sollte.
Commissioner @PaoloGentiloni announces in @SZ that the Commission will only present its proposal for fiscal rules reform once there is a consensus among eurozone countries. Here's why this is a wise approach and why we are still far away from that point: sueddeutsche.de/wirtschaft/eu-…
1/ A weird feeling has grown in recent months that an expenditure rule is the way to go to reform the SGP and that what we basically need now is a Commission proposal that the technocrats then can tweak so that everyone is happy. Everyone is now waiting for that proposal.
2/ In my view, this feeling is a trap and the Commission is now trying to avoid falling into this trap by basically asking member states to come to a consensus what they want before puttting out a proposal.