Feb. 14 (Bloomberg) -- The euro area needs a central government authority with the power to take decisions free of influence from German political institutions, said a report by a group of French scholars, economists and political thinkers.
“The German authorities must understand that the control of European decisions by the institutions of a singular member state is difficult for others to accept,” said the Groupe Eiffel, whose members include European Parliament member Sylvie Goulard, Bank of America economist Laurence Boone, European Council adviser Shahin Vallee and Bertrand Dumont, an adviser to European Commission financial-services chief Michel Barnier.
“Without a doubt the Germans would not accept this themselves from another member state,” the group said. “The current situation, where German federal bodies -- Bundestag, court in Karlsruhe -- hold the fate of the euro in their hands is not good for Germany, placed in a position of hegemony, nor for Germany’s partners, reduced to complying.”
The group calls for the euro area to have its own executive body separate from national governments and chosen by an assembly of participating nations voting on the same day using the same methods. The body should be small, have its own budget and authority over collective decisions. Member nations would continue to control national policies, the group said.
In the long run, such a step would require new treaties for the EU and the euro area, the group said. One option might be to create a tight-knit euro zone and a separate, more loosely organized single market that could include countries like Turkey, Ukraine, Albania and Moldova that aren’t good fits for the EU at present because of their size or development level, the group said.
In the short run, the euro area needs to tackle its economic and social situation as well as its debt outlook, according to the group. Structural reforms so far have been “poorly calibrated” and fiscal policy has been too restrictive, it said.
The Groupe Eiffel was formed to respond to a report last year from the Glienicker Group of German economists who called for closer euro-zone integration and a “controlled transfer mechanism” among member nations. The Glienicker Group includes Bruegel director Guntram Wolff, Daniela Schwarzer of the German Marshall Fund of the U.S., and Clemens Fuest, head of the ZEW Center for European Economic Research.
Other members of the Groupe Eiffel include Agnes Benassy-Quere, Yves Bertoncini, Jean-Louis Bianco, Andre Loesekrug-Pietri, Rostane Mehdi, Etienne Pflimlin, Denis Simonneau and Carole Ulmer.
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