EU summit, contracts for reforms postponed to October 2014

The Heads of State and Government postpone the conclusion on the “partnership for growth and employment and competitiveness.” Countries seek clarity on how to finance the mechanism. Merkel: “Still a lot of work to do”

Four months of extra time to form a mechanism that still does not convince many. After the first day of the Summit, Heads of State and Government of the 28 members decided to postpone the conclusion on “Partnerships for growth, employment and competitiveness” to October 2014, whereas the draft conclusion that circulated until now indicated June of next year as the deadline. The contracts between states to “reward” the virtuous EU countries who implement reforms quickly, still encounter considerable resistance, especially from Germany, who would like greater clarity and more precise guarantees.

“We discussed a lot, but to be honest there is still much work to be done,” admitted the German Chancellor, Angela Merkel at a press conference tonight. “If reforms bound by contract are not offered, I have no money to offer,” she cut short by insisting on the need to apply a “constraining character in governance.”

“I am convinced that greater economic coordination is important for the markets. Analyzing the credibility of the euro zone,” continued the chancellor, the delay on forecast is due mainly to the European elections in May. This postponing will push the procedure back under the Italian Presidency, which will start from July this year.

For many countries it remains unclear how the mechanism of solidarity will work and those who will obtain it. Initially there was talk of grants, guarantees or soft loans, less than 4%, but there was no clarity on how these interventions would be financed. For now all that is known is from where the money won’t come: it will not be taken from the EU budget, not from a specific budget and they will not be Eurobonds either, this latter theory has always seen firm opposition from Berlin.

Contracts and solidarity mechanisms “are the two main elements that we have identified,” noted the President of the European Council, Herman Van Rompuy. The rest isto be determined. The starting point is the original idea: the partnership proposals will be based on national reform programs launched by the government and the country-specific recommendations for the European Commission. They will have to get the go-ahead from the Council after discussion with the EU Commission, who then must ensure compliance with the commitments made.