The Strategist

Germany, France to create a fund for reforms in the EU

06/20/2018 - 15:23

German Economy and Energy Minister Peter Altmaier and his French counterpart Bruno Le Maire announced creation of a special joint fund designed to support structural reforms in the EU countries. The new initiative is presented in a report released on Wednesday, June 20, by the Ministry of Economy in Berlin.

The investments should be allocated to projects that will underline the added value and attractiveness of the European model, the department emphasized.

Bruno Le Maire also commented on plans to create a unified euro zone budget, announced on June 19 by German Chancellor Angela Merkel and French President Emmanuel Macron. The French minister stressed that the parties "have not yet agreed on the amount of deductions." This could be 0.2-0.5 percent of GDP of 19 member states of the euro area. Le Maire is convinced that an amount of 20-25 billion euros can be a "good starting point".

Meanwhile, the head of the European Commission Jean-Claude Juncker supported the package of reforms proposed by Paris and Berlin, and highly estimated the chances of their implementation. "I think this is a very balanced proposal," he stressed, adding that they have sufficient potential for consensus, even if not all 19 countries support them at the same time.

In turn, the Prime Minister of Bavaria Markus Söder spoke out against the innovation. "We cannot now create additional shadow budgets or weaken the stability of the single currency," he said, urging Merkel not to mix migration policy and financial aspects. Söder expressed fears that the German chancellor, with the help of financial incentives, would try to involve other EU countries in cooperation on the refugee problem.