European Union Calls for Centralization of Power

Eurozone countries would have to sign binding contracts with Brussels, committing them to detailed fiscal reform, according to a draft EU agenda that would increase the bloc’s control over national economic policies. The provision, included in a report distributed to EU countries before this month’s summit, would require all 17 eurozone members to sign on to the kinds of Brussels-approved policy programmes and timelines now negotiated only with bailout countries. If adopted, the plan could help to meet demands in Germany for tighter control over the economies of highly indebted countries such as Italy and France that have a mixed record on economic reform. The proposals, seen by the Financial Times, reflect how far some EU leaders believe Eurozone countries would have to sign binding contracts with Brussels, committing them to detailed fiscal reform, according to a draft EU agenda that would increase the bloc's control over national economic policies. The provision, included in a report distributed to EU countries before this month's summit, would require all 17 eurozone members to sign on to the kinds of Brussels-approved policy programmes and timelines now negotiated only with bailout countries. If adopted, the plan could help to meet demans in Germany for tighter controls over the economies of highly indebted countries such as Italy and France that have a mixed record on economic reform. The proposals, seen by the Financial Times, reflect how far some EU leaders believe they need to overhaul the eurozone with more centralized decision-making. It is a shift that many policy makers conclude will require a wholesle change in EU Treaties. The draft is the first salvo in an anticipated fight over how to give the eurozone porwers now reserved for national finance ministries. Coupled with an impending plan from the European Commission president, it threatens a new round of debate over how much sovereignty national governments would cede to a supranational institution. Among the more ambitious proposal included in the document, part of an effort by the European Council president, to create a blueprint for a eurozone economic union by the end of the year, is the creation of a central eurozone budget. This could be used to help struggling countries in times of economic crisis. German officals have expressed support for such a multinational budget as a way to pool national resources without resorting to mutualizing sovereign debt. The French finance minister suggested that such a common budget could be used to run unemployment benefits for the bloc. Officials involved in pre-summit talks said while there was growing enthusiasm for a common budget amoung bigger member states, there was no common view on how it would be funded or used. The document is likely to revive the debate on a "two-speed Europe", with the 17 members of the eurozone headed towards closer economic co-ordinations while the 10 non-euro "outs" struggle to find their role in the union.