This week SPD-leader Martin Schulz spoke of a utopian vision, in the same week it was announced that the Euro-Group will have a new head on the 13th of January, and questions are arising as to whether the European Union is moving towards a more integrated future. Mário Centeno, a Harvard-educated academic who is currently Minister of Finance in Portugal has been voted to succeed his Dutch colleague, Jeroen Dijsselbloem, as head of the Euro-Group. The Portuguese Social Democrat is now moderating and outlining the general fiscal policy of Eurozone members. The Euro-Group consists of the 19 countries in which the Euro is the official currency. It was created in 1998, and consists of the ministers of finance of the Eurozone, which regularly meet to coordinate the fiscal policy of eurozone members, which has included the initiation of austerity packages for Greece in the past years. Nonetheless, it stays unclear for how long the Euro-Group will sustain its power, regarding a surge of pro-European voices calling for more integration of member-states.
The Euro-Group has consistently been under criticism due to its hidden power and secrecy: there are no official rules of protocol, the negotiations are held completely in secret, and yet decisions including billions of tax-payer’s money are made behind closed doors. Consequently, Emmanuel Macron and Jean-Claude Juncker have both proposed to introduce a European Minister of Finance, who would be head of the Euro-Group at the same time. Through this action Macron and Juncker hope to draw the European Union closer together, and possibly push Eurozone countries towards a common European fiscal policy. The Brussels-based economic think-tank ‘Bruegel’ disagreed with this and put forward another suggestion, which would introduce a full-time head for the Euro-Group who would simultaneously co-ordinate the outcomes of the meetings to the European Parliament, and therefore the public. This would leave fiscal policy untouched and improve the reputation of the Euro-Group, keeping the option of joining the Euro attractive.
In order to join the Euro, countries have to fulfil specific criteria, proving their resilience to economic turbulences. However, introducing a common European fiscal policy would mean governments of EU-member states give up significant power to EU institutions. Not only would many countries oppose this step, it would also discourage EU-members not part of the Eurozone to join the Euro, hampering the process of European integration. At this point we have to ask ourselves if it would be wise to consider further expanding the competences of EU-Institutions in economic management. Politically speaking it would further encourage nationalist tendencies in Europe, as governments and the citizens would fear a loss of political and economic sovereignty. Others may argue that further centralization would increase the power of the EU, especially on the international stage when competing with economic powerhouses such as the USA and China.
Yet exactly the lack of a common fiscal policy is the reason the Euro as a currency is often considered as incomplete. Nationalists like Marine Le Pen, who want to return to their former currencies, argue that for proper economic policies, a government has to be in charge of monetary and fiscal policy, and this is simply not the case with the Euro. Other critics argue that a common fiscal policy would result in the ‘rich north’ consistently transferring money to the east and south in huge amounts. Supporters see a common fiscal policy as a chance to enhance economic growth and job creation in all of Europe, as well as driving forward economic equality in between EU-member states. Furthermore, these supporters see a common fiscal-policy as a chance for the EU to be more resilient against financial and economic crises.
Although most economists only consider it a matter of time until Eurozone members will agree upon introducing a common fiscal policy, or even a united Europe, the question arises what Macron, Centeno and Juncker have in mind in the near future. Centeno will have to prove that coordination of economic and fiscal policy in member states through the Euro-Group is effective, and makes EU-centralization in this aspect unessential as of now. He will possibly find himself in a power struggle with Europe enthusiast Macron, who intends to push forward centralization. A lot of the further action will depend on the stance the new German government will take on a common fiscal policy; Angela Merkel has not opposed the idea, is however yet to make an informative statement on this topic.