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31 October 2013

German parties agree outlines of Europe policy

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Talks on a 'grand coalition' in Germany have yielded a tentative agreement on a range of policies to do with the EU. The putative coalition agreement backs a financial transaction tax and a common resolution fund for ailing banks.

Mainly translated from the German

As reported by European Voice (subscription required), negotiators in Berlin agreed to back the prompt introduction of an EU-wide tax on financial transactions and the launch of a common resolution fund for stricken banks, to be financed by a levy on European banks.   

There are continuing differences over the sharing of debt across the eurozone, however. The CDU/CSU rejects a joint debt redemption fund or eurozone bonds, while the SPD backs some form of debt mutualisation. On the other hand, the parties agreed to block any attempt by the European Commission to push for the privatisation of municipal water supply.

"We have agreed to advance the financial transaction tax", the Handelsblatt reports EP president Schulz (SPD)  as having said after a meeting  in Berlin. The parties also agreed that the EU should focus more on European issues and other fields should be regulated regionally and nationally. There was still need for dicussion on aspects of the Banking Union and referenda on European issues, not just between the SPD and the CDU/CSU but also between the latter two parties, reports the Welt.

A debt redemption fund for relief of EU crisis countries as proposed by the SPD "was not possible with the CDU and the CSU", said CDU MEP Herbert Reul. The CSU also wants to discuss in the coalition negotiations an insolvency procedure for states and a possible procedure for eurozone exits. 

Writing for the Frankfurter Allgemeine ZeitungManfred Schäfers warns that a financial transaction tax would do more damage than it would generate revenue for the state. If the negotiators had been wise, they would have asked Sweden about their experiences that with such a tax. There it was soon abolished due to uncontrollable side effects. In France, the results are also discouraging imitation. The negotiators of the CDU, CSU and SPD should be aware of the fact that the tax will not be as easy to implement as they envisage. Similar points are made in a Deutsche Bank Research Paper

European Voice further reports that the agreements so far already mean that Wolfgang Schäuble, Germany's finance minister, has a mandate to discuss the EU's project for a Banking Union at the next meeting of eurozone finance ministers, scheduled for 14 November.  Finance ministers are supposed to agree in December mechanisms to deal with stricken banks – the next stage of Banking Union, following the adoption of a single supervisory mechanism this autumn. Germany is adamant that the resolution fund should not be financed with taxpayers' money, but the specifics of how to finance it until bank levies have provided sufficient funds are yet to be agreed.   

Progress on (selected) non-EU issues, as compiled by the Süddeutsche Zeitung:

Tax increases

No early agreement on the future tax policy of a potential red-black coalition government has been reached, writes the Frankfurter Allgemeine Zeitung. The CDU/CSU reject tax increases to finance even their own campaign pledges. The SPD wants a greater burden for top earners and wealthy people to finance investment. They are still waiting for proposals from the CDU/CSU how to finance investment if not by tax increases. 

Minimum Wage

There have been differing signals in the past few days. The CDU said that in future all social partners should be able to negotiate a wage floor according to the Posted Workers Directive in all sectors. So far, legislation has allowed this only in certain industries. SPD General Secretary Andrea Nahles however said that positions were still "clashing". The SPD keeps insisting on a legal minimum wage of €8.50, "without any watering down". 

Dual Citizenship

The SPD wants to introduce dual citizenship - and the CDU and CSU have signalled some readiness to agree. "The CDU cannot ignore that we do indeed need qualifed immigrants", said SPD negotiator Thomas Oppermann. The exact details are yet to be discussed.

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