January 09, 2018
Where SPD and CDU/CSU differ on Europe
FAZ did a good job dissecting the policy differences between SPD and CDU/CSU over Europe, differences that are likely to be revealed very shortly. Angela Merkel is now heading into dual negotiations - over a future coalition in Berlin, and over eurozone reform in Brussels. The promised progress in March will depend on whether the two potential governing parties can reach a minimal agreement beforehand.
There seems to be much consensus on a superficial level - such as the need to engage with Emmanuel Macron. But there are big difference on the details. The SPD explicitly supports Macron's idea of a eurozone budget, while the CDU does not want it. We think FAZ is wrong to write that the CDU supports the Commission's rejection of a eurozone budget. While that seems to be superficially true, the CDU does not support the Commission's own proposals for eurozone reforms, which are essentially to fold the eurozone budget into the EU's wider financial framework. Martin Schulz recently endorsed the common budget as a tool to raise investment.
There are also different views on the role of a future eurozone finance minister. CDU/CSU want someone to impose fiscal discipline, while the SPD wants a finance minister to stop tax competition between member states (which would require treaty change since tax policy is an exclusive prerogative of member states).
The article says the two parties will fudge the two big issues in the debate about the banking union - the European deposit insurance scheme, and the backstop for the resolution fund.
We would add that the EU debate in Germany is extremely superficial, both in the media and in Berlin in general. Big headline items such as the eurozone finance minister or a eurozone budget are essentially meaningless if there is no agreement on the fundamentals of eurozone governance. The big gap between France and Germany is not whether there should be a finance minister, but that Germany rejects any independent eurozone-level governance that could force policy changes in Berlin.
In a separate story, FAZ writes that Sigmar Gabriel supports Jean-Claude Juncker's request for an increase in the size of the EU budget - on the grounds that the EU cannot accomplish its tasks with a financial framework of no more than 1% of EU GDP.