Insight
One year since Macron’s Sorbonne speech: Plus ça change? by Leonard Schuette 25 October 2018
In September 2017, newly-elected French President Macron laid out his grand vision for relaunching the EU. He has not achieved much so far, but Macron remains the greatest hope for driving much-needed reforms. Just over one year has passed since Emmanuel Macron gave a speech in the ostentatious amphitheatre of the Sorbonne University in Paris. He offered a vision of a sovereign Europe, endowed with significantly more powers, the better to weather the storms of the 21st century. Since then, progress has been made on defence integration, but on the eurozone and Schengen the results have been disappointing. However, though Macron has made mistakes, the lack of new political thinking elsewhere in Europe is primarily to blame. At the heart of Macron’s reform proposals lies an overhaul of the eurozone. Macron believes that the roots of the euro crisis lie in the very architecture of the currency union. He proposed a fiscal union with a eurozone budget overseen by a eurozone finance minister. He also urged the EU to complete the banking union, which has stalled after integrating supervision of the largest European banks. For the French, the banking union requires an EU-wide deposit insurance scheme, to stop bank runs from overwhelming individual member-states. Macron also wants to expand the European Stability Mechanism (ESM), which offers financial assistance to euro members in crisis, into a European Monetary Fund (EMF), endowed with greater powers and resources. So far, few of his ideas have been translated into agreements. At a Franco-German summit in Meseberg on June 19th, Germany reluctantly accepted that fiscal policy – albeit to a limited degree – had a role to play in stimulating European-wide investment and macroeconomic stabilisation. Chancellor Merkel committed to a small eurozone budget and to exploring the possibility of European unemployment insurance – hitherto no-go areas. The summit’s declaration called for the ESM to provide credit to the fund for resolving banks. Although this was not spelled out in the Meseberg declaration, Paris may have to accept that that their proposed European Monetary Fund becomes the EU’s de facto budget supervisor in exchange (as the Germans consider that the Commission, which currently oversees national budgets, has been too lenient with those breaking the rules). CER INSIGHT: One year since Macron’s Sorbonne speech: Plus ça change 25 October 2018
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