“Saint Nicholas” package from Brussels

The proposals build on Commission President Juncker’s September2 State of
the Union speech and, in essence, match closely with the French vision of more
stabilization and risk-sharing in the EU, while they also try to meet German
demands for better supervision of fiscal rules. The strong focus on anchoring
any further integration of the Monetary Union – such as the reform of the ESM
and the introduction of a Eurozone budget – in the institutional framework also
illustrates the Commission’s wariness of being sidelined in their fiscal
competencies and to allow the euro area to further develop on its own. The
release of detailed reform proposals a week ahead of this year’s last European
Council meeting was announced already in September but now appears almost
premature, with the Eurozone’s ability to agree on a timeline (see chart 1,
sources: Deutsche Bank, European Council, European Parliament) and
concrete steps for further integration being seriously hampered by the absence
of and uncertainty regarding a new German government and a lack of
consensus among EA members.

The Commission communication focuses of four areas of reforms – (i) creation
of a European Monetary Fund, (ii) integration of the Fiscal Compact into EU law,
(iii) a Eurozone budget line in the EU budget and (iv) a European Minister of
Economy and Finance. The proposals are to be discussed by EU heads of state
at next week’s European Council meeting but as the Eurogroup finance
ministers did not have the chance to look at the proposals beforehand, the
discussion is unlikely to be full-hearted. The Commission aims at “concrete
decisions” to be taken already six months later at the June 2018 Council
meeting.