Merkel’s conservatives seek to limit her room on euro zone reform

Merkel’s conservatives seek to limit her room on euro zone reform

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BERLIN (Reuters) – Members of Chancellor Angela Merkel’s conservative bloc in parliament are seeking to limit her room for manoeuvre on euro zone reform, a draft proposal seen ahead of her meeting with French President Emmanuel Macron on Thursday showed.

German Chancellor Angela Merkel delivers a news conference in Berlin, Germany, April 12, 2018. REUTERS/Fabrizio Bensch

In the proposal for discussion at a meeting of the bloc on Tuesday, the conservatives’ deputy leader in parliament, Katja Leikert, stressed that individual euro zone member states must remain liable for their own risks.

The paper reflects German conservatives’ strong resistance to German taxpayers’ money being splashed about under any euro zone reforms, which Macron is eager to champion.

“Our guiding principle is that the assumption of risks by a member state must be accompanied by the liability of that state,” read the proposal — seen by Reuters — for debate by the conservative parliamentary bloc on Tuesday.

“Financial aid will only be granted with strict conditions,” the proposal added, insisting that lawmakers in the German Bundestag must retain the right to decide on granting financial aid to other euro zone member states.

Macron was elected last May on a promise to overhaul the European Union, and has called for a euro zone budget to help the bloc cope with external economic shocks.

The paper said Germany and France should not act as an exclusive alliance in the EU.

“We must not overstretch the European Union, because disappointment among citizens over Europe would weaken the successes and acceptance of the European idea,” it added.

In a separate position paper, Leikert and two other senior conservative lawmakers stressed that any reform of the euro zone’s bailout fund, the government-controlled European Stability Mechanism (ESM), into a full-blown European Monetary Fund (EMF) must see it become an independent institution, not subject to control by the European Commission.

“In order to maintain its independence, the EMF must be recognised as an independent institution in EU law (as with the EIB or ECB). A right of instruction for the European Commission must be ruled out,” the position paper, dated April 13, read.

Euro zone leaders are working on reforms with a view to protecting the 19 countries using the euro better from financial crises and help rally the EU around it at a time of strong anti-EU sentiment and Britain’s decision to leave the EU.

But Merkel, who has just begun her fourth and probably final term in office, faces fierce resistance from her conservative bloc to any reforms that would see German taxpayers assume liability for other countries’ debts.

Finance Minister Olaf Scholz, a member of the Social Democrats, Merkel’s coalition partner, said in a weekend newspaper interview that EU reforms proposed by Macron should be addressed before European elections next year. But he added that some of the proposals were not feasible.

Reporting by Andreas Rinke; Writing by Paul Carrel; Editing by Catherine Evans



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