A careful reading of Herman von Rompuy’s Towards a Genuine Economic and Monetary Union does not support your headline that his report opposes shared debt in Europe. The report is full of carefully chosen words that reveal the true goal–replacing national responsibility for financial affairs with a centralized and socialized European regime. Here are just a few quotes from the report that reveal that goal:
1. That the EU will have the ability for “targeted and flexible financial support” to EMU members.
2. That the EU will have the “fiscal capacity to improve the absorption of country-specific economic shocks, through an insurance system set up at the central level.”
3. The Single Supervisory Mechanism (SSM) “will constitute a first step towards a financial market union” via the “ESM (European Stability Mechanism) direct bank recapitalization.”
4. The report calls for “the responsibility of dealing with bank resolution…moved to the European level” and “based on an effective common backstop.”
5. The single resolution mechanism would rely upon a “European Resolution Fund…funded through ex ante risked-based levees on all banks directly…”
6. The report wants a “central fiscal capacity” (This is code for direct taxation.)
7. The report wants “risk-sharing tools” and the “ability to borrow” to “promote structural reforms and for absorbing asymmetric shocks.” (“Fiscal risk-sharing” is one of the report’s “Guiding Principles”.)
8. The report claims that centralized power is the only way to “avoid excessive divergences in competitiveness.” (But the only way to achieve this goal would be to hobble the more competitive, which would benefit no one and harm everyone, because the more competitive provide more goods and services to the market.)
In its conclusion the report reveals its anti-democratic and anti-national government ideals by stating that “national parliaments are not in the best position to take it (common interests of the union) into account fully.” So, rather than the report expressing opposition to shared debt, it is a guideline for moving step-by-step toward that very goal and beyond to total centralization of banking and finance through the socialization of risk.
Patrick I. Barron