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EUROPEAN UNION

Focus: How Macron’s bid to reform Europe has run into trouble

It was billed as his founding speech for Europe. But 12 months after newly-elected Emmanuel Macron laid out his vision for a deeper, stronger EU, has he actually helped bring about any change?

Focus: How Macron's bid to reform Europe has run into trouble
Photo: AFP

On September 26 last year, French President Emmanuel Macron laid out his vision for a reformed European Union to blunt the rise of nationalism and ensure the bloc has a future as an independent actor on the world stage.

AFP looks at how he has fared:

1. Institutional reform

Macron's ambition of major EU institutional reform ran into immediate resistance and even cosmetic changes have faced rough going in the past 12 months.

Macron's desire for a eurozone budget was accepted by Germany in June but has been summarily rejected by Netherlands, which is spearheading a group of small, pro free-market nations that frown at the possibility of rich member states having to hand over more to their poorer counterparts.

Germany meanwhile is putting the brakes on the idea of an EU-wide common deposit insurance scheme for the banks, a key plank of efforts to create a fully integrated European banking system. 

Berlin has also vetoed the idea of a eurozone finance minister or a parliament for the 19-member single currency area, which Macron wanted.

Real reform of EU institutions requires changing existing European treaties and changes would have to be put to a referendum in several member countries, making the whole process even more difficult. 

After the Brexit vote, that is a challenge few EU governments are willing to take on.



2. Defence

Macron has fared better in the defence field, with his call for a rapid intervention force being taken up by nine EU states.

His proposals for a permanent structure to simplify military procurement and a new European defence innovation fund with a budget of 13 billion euros have also been endorsed by members.

The leap forward in European defense cooperation has come as many members question whether the United States under Donald Trump is committed to NATO and the defense of the European continent.

Both Macron and German Chancellor Merkel have publicly warned that Europe can no longer rely on Washington for its security and must do more on its own.

3. Tax

The Macron idea of slapping new taxes on US big tech companies has found some success in the EU over the past year. 

A majority of bloc members back Macron's desire to see companies such as Apple, Google and Facebook pay tax where they actually do business, with a concrete proposal expected by the end of the year.

But the devil will be in the detail as tax matters require unanimity in the European Union and resistance by Ireland, Malta and Sweden could easily 
scupper France's ambition.

France could corral like-minded countries to adopt the tax in a smaller grouping, but that was already been tried with the so-called Tobin tax on 
financial transactions which has been bogged down in endless negotiations since 2011.

4. EU identity

Many of Macron's proposals were aimed at fostering a more cohesive “European” identity on the continent, which despite 60 years of ever closer integration remains a patchwork of nation states.

Ideas such as creating so-called “European universities” meant to bring together different national institutions which would share students and expertise, have been adopted and will soon become reality.

But another flagship proposal — the idea of “democratic conventions” to discuss the future of the European Union in each of the member states — has not yet generated mass public interest.

The French presidency says 400 events were organised in France, attended by 30,000 people, while the EU Commission has organised an online consultation.

Macron's proposals to make some members of the European Parliament elected from EU-wide constituencies was also put on the backburner until 2024, the next election year after European Parliament polls in May 2019.

5. Migration

New arrivals from Africa and the Middle East remain the biggest source of tension in Europe, pitting eastern member states as well as Italy's new hardline populist government against western European members. 

The creation of a beefed-up EU border force, as supported by Macron, has got bogged down due to objections from some members states, including Italy, that their sovereignty will be diluted.

The creation of a new EU asylum office, the harmonisation of asylum rules across the bloc and a mechanism to distribute refugees among member states are all highly contentious and unlikely to come to fruition soon.

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EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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