Blueprint for beefed-up Euro-11 set to spark row

Date: 08/06/2000

By Peter Chapman

A FRANCO-BELGIAN blueprint for raising the euro zone's political profile will fuel outsiders' fears that they will be sidelined in future discussions on key issues affecting all 15 EU member states.

Under the plan, meetings of the Euro-11 group of finance ministers would be extended from the current two hours to as much as a full day, relegating Ecofin sessions involving all 15 ministers to the following day. When euro outsiders are in the EU presidency hot seat, they would also be asked to give their observer status at European Central Bank meetings to a representative from inside the single currency area.

The proposals will feed British and Danish concern that the powers of Ecofin - arguably the most influential Council of Ministers grouping - are being sapped in favour of the two-year-old Euro-11 circle of 'in' ministers.

France has vowed to overhaul the Euro-11, which will become the Euro-12 from next month when Greek Finance Minister Yannos Papantoniou attends his first meeting, after it takes over the Union presidency on 1 July.

French Finance Minister Laurent Fabius and his Belgian counterpart Didier Reynders, who will chair the Euro-12 throughout 2001, have forged a "common strategy" to beef up the group's role because they believe that poor policy coordination has contributed to the fall in the euro's value against the US dollar.

They are determined to strengthen the group in the run-up to the introduction of euro banknotes and coins in the first weeks of 2002, and have succeeded in persuading an initially sceptical German Finance Minister Hans Eichel of the political necessity to do so.

The key change proposed by Fabius and Reynders is to hold half or whole day meetings of Euro-12 in future instead of getting together for just two hours on Sunday nights, as they did this week.

The extra time would be devoted to more detailed discussions on the latest economic and monetary developments, progress made in cutting excess public spending, and monitoring reforms of labour laws and welfare systems.

They will also propose changing the current rules which allow the president of Ecofin and a European Commissioner to "participate" in the fortnightly meetings of the ECB's governing council so that the euro zone always has a representative at those get-togethers. This would mean asking Swedish Finance Minister Bosse Ringholm, who will chair Ecofin meetings in the first half of next year when his country holds the EU presidency, to surrender his seat at the ECB table to Reynders.

Ringholm told European Voice this week that he did not think this would be a problem as his country was not a member of the single currency area, and added that he would have no objections to the move to hold longer meetings of euro-zone finance ministers as long as "the Euro-11 deals with Euro-11 questions and not more general ones, such as the savings tax, which are for Ecofin".

But British Finance Minister Gordon Brown has made it clear that he will resist any attempts to 'formalise' Euro-12 structures. Although he has signalled his support for improving the group's coordination, Brown is sticking to the wording of a hard-won agreement reached at the December 1997 Luxembourg summit. This states that while euro-zone ministers may "meet informally among themselves to discuss issues connected with their shared specific responsibilities for the single currency", Ecofin is "the centre for the coordination" of economic policies.

Reynders and Fabius are also working on making full use of Article 113 of the EU's new consolidated treaties, which not only allows the Council president and a Commissioner to participate in ECB governing council meetings, but also to "submit a motion" to the council for "deliberation", such as on the need for currency intervention in support of the euro. Fabius said this week that he wanted to see a Euro-12 "which fully plays its part, which considers, proposes and debates with the ECB".

A Franco-Belgian blueprint for raising the euro zone's political profile will fuel outsiders' fears that they will be sidelined in future discussions on key issues affecting all 15 EU Member States.