Five horsemen of the euro’s future

By Florian Eder

As Grexit looms, the EU pushes new proposals for deeper integration of the Eurozone.

The threat of an imminent Greek exit from the euro may be the talk of Brussels, but the EU is unveiling bold proposals this week to deepen political and financial integration inside the eurozone.
A so-called “five presidents’ report” obtained by POLITICO includes calls for a eurozone finance minister and stricter controls over the budgets of the 19 countries, including Greece, that use the single currency.

The glossy 24-page document (28 in the German version) — entitled “Completing Europe’s Monetary and Economic Union” — will be published on Monday. It’s to be discussed at the EU summit that begins Thursday in Brussels.
Commission President Jean-Claude Juncker drafted the report with European Council chief Donald Tusk; the Eurogroup’s head Jeroen Dijsselbloem; Mario Draghi, the president of the European Central Bank; and European Parliament President Martin Schulz.
Coming ahead of an emergency EU summit on Greece Monday night in Brussels, a report on the future of the eurozone may seem ill-timed. But several governments, including Berlin, are more open now than ever to at least discuss steps toward deeper integration proposed by the “five presidents,” seeing it as a signal of reassurance to financial markets that the euro will endure any outcome on Greece.
The proposals mostly echo calls by Germany and other rich northern eurozone countries to enforce spending rules across the eurozone.
It won’t go down well in Greece or the poorer southern rim states, which want more “solidarity” within the eurozone — in other words, financial support in times of trouble. The report doesn’t foresee common lending (“euro bonds”) and only alludes to a “euro area-wide fiscal stabilisation function” in case national budgets are “overwhelmed.”
The “five presidents” call their proposal for future eurozone governance a “roadmap that is ambitious yet pragmatic,” sketching out several stages to deepen the union.
In a first “deepening by doing” stage, the EU would “build on existing instruments and make the best possible use of the existing Treaties” to enforce the eurozone’s fiscal rules.
The second stage, which potentially could mean changes to the EU treaties that would cause difficult discussions about transferring more powers to the EU, is not supposed to start until 2017, the report says.
A  “genuine Fiscal Union” requires more joint decision-making on fiscal policy, the report says. While not every aspect of each country’s spending and tax policies will be overseen by Brussels, “some decisions will increasingly need to be made collectively while ensuring democratic accountability and legitimacy,” report says. It calls for a “future euro area treasury“ that “could be the place for such collective decision-making.”
Sources involved in the drafting process said that only three of the five “presidents” significantly contributed to the report: Juncker who oversaw the project; Draghi who has been advocating closer political ties among the euro states; and Schulz who seized on his inclusion after he was left out when “four presidents” issued a report on the future of the monetary union three years ago.
Although Tusk presides over Euro summits where eurozone leaders convene, he comes from a non-euro member and focuses on foreign policy more than economic affairs, according to aides.
Dijsselbloem wants a second term as chairman of the eurozone’s finance ministers and didn’t want to hurt his chances by taking a hands-on role in drafting the report, according to sources close to the drafting group of presidents.