The economic papers in Spain published on Tuesday the seven Dutch proposals to create an EU commissioner to oversee and intervene in the euro zone budget. This official would have the right to expel members who refuse to meet budget requirements.
“It is certainly an interesting idea that Germany supports,”
said Chancellor Angela Merkel a few weeks ago. On Monday, in the federal congress of the CDU, the Chancellor again referred to the proposal somehow indirectly commenting that to increase budgetary stability in many countries automatic penalties for states that violate common rules need to be set up as well as the capability to interfere in national budgets.
Amsterdam wants to go beyond the new European budget rules that will become law in January. Also, it believes that sanctions need to be more aggressive and more automatic, as only intensive supervision of the budgets of others can avoid the next crisis.
“These are the main elements of the Dutch proposal:
“1. Every three months, the Ministers of Finance should monitor debt reduction measures adopted by countries with a deficit of more than 3% of GDP and/or a debt of more than 60% of GDP.
“2. The EU should establish an independent budget authority, led by a strong commissioner, or ‘czar,’ to oversee compliance with EU standards.
“3. This commissioner should have the power to punish countries that fail to make progress in reducing their levels of debt and deficit through a gradual approach that the Dutch called a ladder for intervention.
“4. The ‘squandering’ countries could be first forced to raise taxes or cut public spending to get their public finances back in order. If an offending country ignores such requirements, sanctions would be considered such as cuts in subsidies.
“5. The final step would be to place a fractious country under the supervision of the budget commissioner, which would have to approve its budget before it was submitted to a national parliament.
“6. At this stage, if a country does not comply with the measures that would be required to implement, it would have the option of leaving the euro, or even, potentially, could be forced out. However, this would require a change in the Treaty of the European Union and is a penalty that could not be applied today.
“7. The budget commissioner would ensure that emergency funding for euro area members out of the international capital markets could only be granted on condition that all payments of debt and interest payments were the main priority.”