Germany Wants Unelected Council to Oversee National Budgets

Robert Michael/AFP/Getty Images

Germany Wants Unelected Council to Oversee National Budgets

The European Union needs a “stability council” to ensure nations stick to their budgets and to impose sanctions should they stray, German Economic Minister Philipp Rösler said August 9.

The council would be independently run and would determine how aid money is spent. “A stability council wouldn’t mean—‘you’re not getting any money,’ but rather, ‘we’ll apportion it for you,’” said Rösler.

Nations would face “competitiveness tests” to measure how well they are managing their budget. “If you fail them, there should be consequences,” he said.

He also said that Europe should pass a “debt brake” law, similar to the one Germany has. In Germany, this law forbids the government from borrowing more than 0.35 percent of gross domestic product.

Rösler said he would present this proposal at the next EU finance ministers meeting. However, a government official told the Financial Times Deutschland: “This is an opinion of the ministry and not a government position.”

Rösler’s statements come as members of German Chancellor Angela Merkel’s own coalition party are criticizing her for agreements she made at the eurozone summit on July 21. Some members of the Christian Democratic Union have called for an emergency party conference to debate the government’s eurozone policy.

To win German approval, the eurozone’s bailouts must give Germany a level of power over the nations it is bailing out. Without that, German politicians do not dare back them.

Stratfor’s Peter Zeihan points out that this proposal would seem to force eurozone nations to make their economies more like Germany’s. This would not be good for them. Their economies are fundamentally different, and imposing these kind of conditions on them would make growth “almost impossible,” says Zeihan.

“If the European Financial Stability Fund is going to be expanded to the volume that is necessary to make a real difference in the euro crisis, Germany is going to have to be bought off,” he says. “This may well be the price.”

This stability council, then, would put Germany at the top of the eurozone and keep the other nations in their place.