Wolfgang Schäuble, the outgoing German finance minister, affirmed his commitment to the ambitious European integration agenda laid out by French president Emmanuel Macron, but said that the project should be done without requiring changes to the treaties which govern the European Union.
Schäuble said that strengthening Europe was “much more difficult than you can imagine from the outside”, because the EU was bound by its legal basis.
“We have to find out how we can become more dynamic, to make stronger European institutions,” said Schäuble, speaking to a packed audience at the Institute for International Finance yesterday. “But treaty change is not the way to go.”
He continued: “The question of how we can get it done in the mandate [of existing EU treaties], that’s the next step… we agree with Mr Macron.”
The Lisbon Treaty, the most recent part of the EU constitution, took eight years from launch to completion, and was rejected by Ireland in a referendum.
Schäuble, who has been a vocal opponent of risk-sharing between Germany and European countries with weaker public finances, said that additional steps in risk-sharing could “support growing Euroscepticism” if the steps were not taken in the right order.
The right order means risk reduction first — if European states are to pool resources to backstop banks, the banks need to be safe.
His remarks come the day after the European Commission unveiled a package of measures to complete the ‘Banking Union’ in the bloc, and share the risk of bank failures. However, the plan on the table steers clear of true mutualisation of any bank losses.
The Commission outlined a European Deposit Insurance Scheme which would offer loans as a backstop to member states’ own deposit insurance schemes. Then, once Europe’s banks were judged to be cleaned up, it would share any potential losses with national deposit schemes.
A previous Commission paper suggested the scheme be funded by a credit line from the European Stability Mechanism, the vehicle which has been used to bail out countries in Europe’s periphery.
But a paper from the German finance ministry circulated on Tuesday squashed this idea, saying that: “More ambitious scenarios and plans for the ESM and its financial capacities, either regarding the possible role as an additional backstop for the controversial European Deposit Insurance Scheme, or regarding a brand new fiscal capacity as a transfer mechanism for the eurozone would put much too great a strain on the ESM and go against its core purpose of bailing-out countries in severe trouble.”