German Chancellor Angela Merkel has raised the stakes of a “United States of Europe” after emphasising a ‘tighter fiscal union’ between eurozone economies and stregthening the framework.
Her latest proposals include implementing firm rules on tax and eurozone governments’ spending with central banks working in unison to devise interest rates and other monetary measures.
During her latest speech to the Bundestag, Merkel said she wants to see an empowered European Courts of Justice that is able to penalise governments for irresponsible fiscal policies and financial practices.
The German stateswoman’s speech is seen as a clear indiction of what could be the future of eurozone in which participating economies will be governed under a federal economic law, bound by tight rules and regulations and fiscal responsibilities. Many observers are already calling the announcements as genesis of “The United States of Europe”.
Notable economics journalist Steve Evans said Germany is looking for more control of the eurozone. “Merkel wants the economies unified with very tight rules from the centre,” he said in an interview with BBC.
Critics expected Merkel’s parliament address will signal a her change in stance on European Central Bank acting as the “lender of the last resort”. Instead, the 57-year-old chancellor demanded “greater integration within Europe”.
“We need budget discipline and an effective crisis management mechanism. We need to change the treaties or create new treaties,” she said in her Friday speech.
Observers suggest Germans fear that a looser monetary policy within the European Union will herald the return of the vicious hyperinflation of the 1920s under the Weimar Republic which created ripe conditions for National Socialism to flourish.
France, along with Britain and the United States, want to see the ECB acting as a lender of last resort that supports troubled eurozone countries and provides them necessary bailouts. Berlin insists?such a role contravenes EU treaties and would hurt German economy.
Merkel has so far refused to cave in to international demands to hand over autonomy to ECB. Her party aides say she will advocate further European integration at next week’s EU summit while advocating reforms that could make or break the euro.