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Economy

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Strong signal by northern eight unlikely to be game changer in eurozone reforms

March 13, 2018


Abstract : Eight European Union (EU) member states launched a joint communique earlier this week urging more caution in eurozone reforms, but this "strong political signal" to Berlin and Paris is unlikely to become a game changer, Dutch experts say.

欧盟

THE HAGUE, Mar. 13 (Xinhua) -- Eight European Union (EU) member states launched a joint communique earlier this week urging more caution in eurozone reforms, but this "strong political signal" to Berlin and Paris is unlikely to become a game changer, Dutch experts say.

"The coalition of the Eight, in which the Netherlands played a leading role, gives a strong political signal to Germany and France and the way they approach European integration," said Adriaan Schout, coordinator Europe and senior research fellow at Clingendael, Netherlands' leading institute of international relations. "The move should also be seen as a sign of tiredness with the Franco-German dominating activism."

A WARNING MESSAGE

In the communique, Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, the Netherlands and Sweden suggest more caution to "far-reaching proposals", referring to the joint eurozone budget or common finance ministry put forward by French President Emmanuel Macron for deepening eurozone integration.

Instead, "stronger performance on national structural and fiscal policies in line with common rules" are more needed to build a strong eurozone, said the communique.

The Northern group also sends a message to the Commission, the EU's executive arm, which has supported Macron's proposals, said Schout. "Simply the emergence of Macron has created a lot of room of manoeuvre for Jean-Claude Junker (the Commission's president) to push ahead for more Europe."

The main message is to warn against the Germany-France tandem pushing European integration forward without consulting other member states, said Ben Crum, professor of political science at the Vrije Universiteit Amsterdam (VU).

Germany has opened the door to eurozone reform, as also indicated by the new government agreement, even though it is still unclear how far Berlin will finally proceed with Macron's reforms. "Since his election Macron has eagerly courted Germany, and Berlin has put a lot of hope on the French president," noted Crum. Following the formation of the new government in Berlin, Chancellor Angela Merkel is expected to continue talks about reforming the eurozone with Macron.

"In recent years, step by step, Germany's prominence has been materializing across the European policy domain and the institutions," said Crum.

Berlin has taken the lead on the handling of the euro-crisis and the refugee crisis. Moreover, Germans are taking over at a majority of EU institutions, as amplified with the recent appointment of Martin Selmayr, secretary-general of the European Commission since March 1, 2018.

With the Brexit, "there was a 'window of opportunity' that the Germany-France tandem would use to push European integration forward" and have failed to engage and mobilize the rest of the member states and appear to maintain a rather arrogant attitude towards them, said the political scientist, who is also co-leader of European law and governance at Access Europe, the Amsterdam-based Centre for Contemporary European Studies.

Therefore the northern eight called on Germany and France to get out of their tight embrace and to properly engage with the other member states. "It is exactly this that has been challenged by the coalition of the eight, and in which lies its importance," said Crum.

WHY GROUP OF EIGHT

The Netherlands is working in various ways on coalitions, explains Schout, but "other countries also fear the departure of the UK and look into the Netherlands to take over Britain's role".

The Dutch government has repeatedly rejected the notion of "the inevitability of closer cooperation in a European federal state" after Brexit and criticized the narrative of "ever closer Union".

Dutch Prime Minister Mark Rutte has sought to form alliances, on certain cases in cooperation with his Benelux counterparts, among Nordic, Baltic and central European countries, including Austria and the Visegrad Four -- Poland, Hungary, Slovakia and the Czech Republic.

For this battle against "far-reaching proposals" the Netherlands looked towards the north, leaving aside its Benelux allies, Belgium and Luxemburg. "It is quite subtle to manage a group of countries. You can sense the difficulties and disagreements in forging such an alliance," said Schout. "Luxemburg and Belgium are formally much more on line with the Macron proposals."

Now with non-euro members Denmark and Sweden allied, the group of eight seeks to avoid a split between the 19 euro-countries and the rest of the EU, noted Schout. "Deeper integration draws the wedge between those in and those out of the euro area. If Southern countries reform, we do no need deeper integration so that this wedge will not arise."

DEFENSIVE STATEMENT

But the group of eight is not the most impressive coalition in terms of membership, argued Crum. The eight countries represent 13.5 percent of EU's GDP and just 9.7 percent of the bloc's population. Germany and France jointly amount to 36 percent and 29.3 percent respectively, while the southern seven EU countries represent 36 percent of EU's GDP and 38 percent of its population.

Also, the joint statement issued by the eight "is rather defensive and restrictive in substance, and hence unlikely to enthuse many," said Crum. For these reasons the statement is not expected to be a game changer on the specific issues it addresses, the expert suggested.

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