No easy wins on offer at European summit

Member states still split on future of eurozone.

Significant differences remain between France and Germany over the future of the eurozone as leaders of the European Union’s 27 member states go into their first summit since the summer.

The gathering in Brussels today and tomorrow (18-19 October) is unlikely to result in any major progress on proposals for a banking supervisor or on steps to strengthen the economic and monetary union, even though these issues are expected to dominate discussions.

The basis for discussion will be an interim report on economic and monetary union drawn up by Herman Van Rompuy, the president of the European Council, in conjunction with the presidents of the European Central Bank, the European Commission and the Eurogroup of eurozone finance ministers.

The report suggests measures that eurozone member states could take to stabilise and strengthen the common currency, including the creation of a eurozone-wide budget and contracts to enforce budgetary discipline on eurozone member states.

Leaders are not expected to take any decisions this week, preferring instead to continue fine-tuning their approach until the European Council on 13-14 December. That is a choice made easier because they are under less immediate pressure from financial markets thanks to the European Central Bank’s announcement in August that it is willing to make unlimited purchases of bonds from struggling countries.

The prospect of treaty change is not expected to be high on the agenda. José Manuel Barroso, the Commission president, put forward the idea of EU treaty revision last month, but Van Rompuy has deliberately played down the need for treaty change in his plan, with officials keen to point out that most of his suggestions are deliverable without it.

Whether treaty change makes its way into discussions will depend on how forcefully Germany pushes for more ambitious measures. Germany’s finance minister, Wolfgang Schäuble, set out his own plan for the eurozone on Tuesday (16 October). Schäuble’s proposal, which goes further than Van Rompuy’s blueprint, includes giving greater powers to the European commissioner for economic and monetary affairs and calls to start work on treaty change by the end of the year. France is opposed to this.

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Members of the European Parliament’s economic and monetary affairs committee made their own contribution to Van Rompuy’s report on economic and monetary union when they voted in favour of a series of proposals on Monday (15 October).

Their resolution included demands for the Parliament to approve nominations to chair the EU’s banking supervisor and the European Stability Mechanism (ESM), the eurozone’s rescue fund.

Disagreements remain over the introduction of a single banking supervisor, but there is more determination to make progress on this issue and leaders are expected to underline their commitment to finding a solution. Germany is at odds with France over the speed with which legislation should be approved, with Germany cautioning against a hasty agreement.

The European Council is unlikely to make any progress on Greece with the country’s government still in discussion with the ‘troika’ of the European Commission, European Central Bank and International Monetary Fund over a €13.8 billion package of tax rises and spending cuts. Reaching a deal is necessary for Greece, as it needs the next €31bn instalment of its bail-out by mid-November.

Leaders of eurozone countries are likely to release a general statement offering encouragement to the Greek authorities but little of substance is expected.