July 30, 2015

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Schauble’s coup: the next stages

Frankfurter Allgemeine leads its website coverage with a shocking scoop from Werner Mussler, according to which Wolfgang Schäuble is planning the next step in his eurozone coup: he wants to replace the European Commission's role in eurozone fiscal oversight with that of an independent institution. This is not a just a proposal, but a well coordinated action plan with Jeroen Dijsselbloem, who will elevate this subject to a discussion point during the Dutch EU presidency in the first half of 2016.

Schäuble is evidently annoyed by the role Jean-Claude Juncker and his Commission have been playing in the Greek crisis, and is now seeking to reduce the role of the Commission to that of a guardian of the treaties. Under Schäuble’s plan, competition policy should be handed out to an independent institution. Mussler writes that the backdrop is a power battle between the eurogroup and the Commission, which has become more assertive under Juncker, not only in the Greek crisis, but also on the question of the investment fund. The article quotes diplomats as saying Schäuble does not in principle reject the idea of a political Commission, but rejects the notion that a political Commission can simultaneously be entrusted with implementing EU rules. 

Another interesting aspect of this story is that Schäuble also seems to have coordinated his position with the UK, which is - for different reasons - interested in a reduction in the role of the Commission too. Mussler also discusses Schäuble’s recent proposals for a European finance ministers and a European budget, which he says are entirely tactical. Schäuble is actually not in favour of either, but would accept a limited federal core if he gets his way on the points that matter - essentially a rules-based, throw-away-the-key type of fiscal policy.

In a separate comment in the paper, Mussler argues that Schäuble’s proposals are hugely dangerous. Independent institutions are likely to be weaker than the existing ones.

Our other stories

Today we also have stories on whether Syriza will split; what to make of the latest Spanish polling; politics and capital controls; the PD's Faustian pact; why the eurozone is not converging, and in defence of Varoufakis.

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