Van Rompuy promises more reform, but no quick fix

Greece urged to stick to its commitments.

Herman Van Rompuy, the president of the European Council, emerged this morning empty-handed after a meeting of national leaders in Brussels.
He made no claim to have come up with immediate solutions to the eurozone’s pressing problems, particularly the threat of Greece leaving the single currency.

Instead, he said that the “focused and frank” discussions had “prepared the ground for common decisions in June, five weeks from now”.

But Van Rompuy did raise the possibility of further institutional reform for the eurozone.

“We need to take economic and monetary union to a new stage,” he said. “We need to strengthen the union.”

But again he played for time, saying that he would be reporting to the European Council meeting on 28-29 June, after discussions with the president of the European Commission, the president of the Eurogroup, and the president of the European Central Bank. His report would be on “working methods and possible building blocks”. It would not, he said, be a fully fledged plan for deepening monetary union.

François Hollande, France’s president, also signalled that treaty change was a possibility. But, he said: “At this stage there was no discussion whatsoever on existing treaties that we would have to amend or new treaties that would have to be negotiated.”

Among the ideas being floated, Van Rompuy said, were Eurobonds, closer banking supervision and a common deposit insurance scheme.

On Greece, Van Rompuy said: “We want Greece to remain in the euro area while respecting its commitments.”

He said: “Continuing the vital reforms to restore debt sustainability, foster private investment and reinforce its institutions is the best guarantee for a more prosperous future in the euro area. We expect that after the elections, the new Greek government will make that choice.”

Van Rompuy said the bulk of the five-and-a-half hour meeting had been devoted to discussing how to boost growth in Europe. He identified three types of policy suggestions: structural reforms, including passing the proposed Single Market Act and the energy efficiency directive; increased investment, including an invitation to the European Investment Bank to increase its capital, better use of structural funds, and the issue of project bonds; and measures to strengthen job creation.

Chancellor Angela Merkel of Germany declined to comment on Greece, beyond saying that the leaders had sent a “positive message” to Greece while also insisting that it meet its international obligations.

Merkel reiterated the German view that eurobonds make sense only after deeper fiscal and economic integration in the eurozone.

“I outlined the German position, which is that far stronger economic co-ordination in the eurozone is needed and that we are facing considerable difficulties with regard to the possibilities offered by the treaties,” she said.

Hollande said: “I respect Mrs Merkel’s point of view when she says Eurobonds are not a tool for growth in themselves but they are nonetheless a tool that can help promote growth in some circumstances, so it is a discussion we will keep on having, but we did not expect a decision tonight and there was no decision. But there was no conflict, no confrontation.”

He added: “Some countries were even more against Eurobonds than Mrs Merkel, and some also are in favour of Eurobonds and not the tax on financial transactions. This is true in the case of the UK. And some countries are against everything.” 

Merkel said that project bonds should target those countries that needed such investments the most, and listed Greece, Portugal, Spain and Italy.