Some say there’s “18% more union”. That’s what Bloomberg opined anyway. It said that the decision by Germany’s Angela Merkel to join France’s Emmanuel Macron in backing a 500-billion euro European Commission lending facility is a very big deal. It doesn’t mean there will be a United States of Europe any time soon, but the fiscal union Europe needs is a step closer.
It’s true that the week began with France and Germany presenting their big-bucks proposal for a fund for European solidarity that would allow countries to borrow together and keep the money forever. The grants proposed went way beyond a controversial earlier rescue package based on loans. Finally, it seemed as if Germany, Europe’s biggest economy, was prepared to put its money where its rhetoric is.
But the truth is the Mrs Merkel and Mr Macron have left crucial and contentious details vague. They haven’t said how they would like the money to be allocated, or exactly how the new borrowings would be repaid. And even though agreement between France and Germany on a new fiscal plan is necessary for anything to happen, it doesn’t mean a done deal. All 27 EU members need to agree. More to the point, the “frugal four” – the Netherlands, Austria, Denmark and Sweden – need to be onboard.
Already, the Dutch have demanded that Europe’s southern states promise reform in exchange for any money. Dutch prime minister Mark Rutte has said that any aid under the new European recovery fund will have to be linked to far-reaching reforms It wasn’t an outright rejection of the Franco-German plans but it restated familiar objections to greater union.