Caution over deepening of Euro economic union

EU leaders yesterday continued to prepare the groundwork for the unveiling of more economic and fiscal integration amid differences between member states on the way forward.

Malta, represented by Prime Minister Lawrence Gonzi, reiterated its broad support for further economic integration and agreed on the principle of a banking union. However, it warned against being in too much of a rush to enact more reforms.

Speaking at the end of the first day of the EU summit, Dr Gonzi said the country agreed with banking union and a supervisory system aimed at making sure that what caused the economic and financial crises would be prevented in the future.

However, he underlined that Malta was not in favour of a fiscal union particularly if this impinged on its taxation system.

“We had already made it clear in the past that we want to protect our competitiveness and that is why we want to keep full national control over taxation. We will keep our focus on this position and will not change it,” he said.

Last June, the President of the European Council, Herman Van Rompuy, was tasked by member states with preparing a roadmap on the next stages of a new Economic and Monetary Union.

The final report is expected to be presented to EU leaders during the December summit and the present gathering will serve as preliminary discussion about the ideas on deepening the EU’s integration.

Although the summit is expected to come up with some sort of agreement on the first building blocks of the new European economic architecture, particularly on the banking union and the supervision of the banking system by the ECB with the help of national regulators, the tough proposals related to a fiscal union have been left for next December.

Just before the arrival of many of the EU’s leaders, German Chancellor Angela Merkel expressed the idea that the European Commission should be given the powers to veto national budgets if member states do not keep within the rules of the EU.

This highly controversial proposal, seen by many as infringing on the sovereignty of member states, was not well received by a number of countries, including France.

Asked about this proposal, Dr Gonzi said that Malta did not yet have a position on the issue.

“Although we agree on the principle that member states should exert more fiscal discipline, particularly with regard to debt and deficit, we still need to look into the details of the latest proposal,” he said.

Maltese diplomatic sources yesterday said the island would prefer to see the implementation of reforms that had already been agreed upon before the introduction of new proposals.

“It is not healthy to continue to rush things especially if we have not yet implemented what we have agreed on a long time ago,” a senior diplomat said.

EU leaders are expected to conclude their discussions today. Another summit has already been scheduled for next month to discuss and possibly agree the next seven-year budget covering2014-2020.