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World

AFP
April 17, 2018

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Merkel’s party cools on eurozone reforms

Chancellor Angela Merkel’s conservative party on Monday pushed back against plans for deeper eurozone integration, just days before French President Emmanuel Macron is to visit Berlin to discuss his ambitious reform proposals.

After a meeting of top brass, Merkel’s Christian Democratic Union (CDU) party criticised Macron’s flagship idea of creating a eurozone budget and voiced scepticism about plans to expand the EU’s bailout fund.

Any reforms have to be "in the European and in the German interest," CDU secretary-general Annegret Kramp-Karrenbauer told reporters. She said a separate eurozone budget as envisaged by Macron, which could be used to finance investments or in case of crises, was not a priority at a time when the wider European Union was already grappling with the challenges of Brexit.

"I don’t think it makes sense" to focus on a common budget for the single currency, she said, noting that the remaining 27 EU member states still had to find a way to plug the multi-billion-euro gap left in the bloc’s budget by Britain’s departure.

"We’re of the opinion that the first priority is to deal with the issue of the European Union budget," she added. The comments came after talks between the CDU and their CSU Bavarian sister party which is even more sceptical about the French-inspired reform drive -- which many fear could translate into a transfer of German taxpayer money to troubled economies.

In a joint paper released by lawmakers from both parties Monday, they gave only cautious backing to plans to expand the European Stability Mechanism into a European Monetary Fund that can act as "lender of last resort" in a crisis.

Although such a fund is seen as one of Macron’s least controversial proposals, the German document nevertheless said it could only support it if national parliaments, and not the European Commission, had the final say over how the money was spent.

It also said the disbursement of aid would have to be tied to "strict conditions", and the creation of the fund itself would require an EU treaty change that would have to be agreed by national MPs.

The German objections are likely to slam the brakes on Macron’s reform drive, and threaten to scupper hopes of any concrete progress being made at an EU summit in June. Merkel, who has voiced support for the French ideas but has stayed vague on details, is due to hold talks with Macron on Thursday. "The will to find a common way forward is still there," German government spokesman Steffen Seibert told reporters in Berlin.

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