EU ministers collide over timid eurozone reforms

LUXEMBOURG, EU finance ministers wrangled over

watereddown economic reforms Thursday with France hoping the eurozone budget

it has long been pushing for was finally within reach.

Almost a decade after the debt crisis, French President Emmanuel Macron

wants his partners to implement the changes in order to make the single

currency area more resilient to shocks and to tackle the global dominance of

the United States and China.

But resistance to overhauling the eurozone has deepened, amid a budget row

with populistled Italy, and as richer northern countries grow reluctant to

indulge the budgetbusters to the south.

This distrust and hesitance has plagued the eurozone since it was launched

in 2002, a disunity that economists say limits growth and invites crisis.

Ministers are discussing France's flagship reform of a eurozone budget

that has been scaled back by opponents led by the Netherlands that fear a

transfer of wealth to Italy, Greece or Spain.

We are not far from a consensus, French Finance Minister Bruno Le Maire

said on Thursday as he arrived for talks that were expected to last late into

the night.

Such a step would be a major breakthrough in strengthening the eurozone,

he said.

We are close, said German Finance Minister Olaf Scholz who added that

approval was widespread for a FrancoGerman compromise on the delicate

matter.

Not a budget �

The EU ministers are officially not negotiating a budget � which would be

too politically sensitive � but something called the Budgetary Instrument

for Competitiveness and Convergence, a fund with limited firepower to be used

to back reforms.

The cumbersome renaming comes at the demand of the Dutch, who have only

accepted the instrument on condition that it remains an extremely modest

affair.

The skeleton of Macron's plan on the table comes after months of

negotiating the broad elements, including spending priorities, source of

revenues, and who should ultimately wield control over its decisions.

A European source said it was the last element that would keep ministers

up late with the Netherlands and others insisting the budget remains under

the auspices of the EU budget.

As such, the budget's firepower would remain at a modest 17 billion euros

over seven years with no chance of expansion and under the authority of the

EU's 27 member states (after the exit of Britain).

Macron had originally demanded an amount of several hundred billion euros

to be used to stabilise economically weak countries, but this was swiftly

slapped down.

The young French leader also wanted the creation of a eurozone finance

minister, an idea that was fast cast aside under pressure from Germany, which

prefers that power over the economy remains national.

'Impasse' �

Ignored for now is a Europewide deposit insurance scheme, which is

supposed to be the last pillar of an EU banking union set up after a series

of bank failures during the worst of the crisis.

Regrettably, the impasse on this project is still there. No tangible

progress has been made, said EU commission vice president Valdis Dombrovskis

on Wednesday.

The deposit scheme is resisted by Germany, Finland and other northern

European countries that fear being put on the hook for deposits in fragile

countries such as Italy or Greece.

Ministers also discussed Italy with Rome in infraction of EU budget rules

and in danger of major fines inflicted by its currency zone partners.

Source: Bangladesh Sangbad Sangstha (BSS)