BRUSSELS – Four top European Union officials on Thursday set out a blueprint for a closer financial union in a move that will clash with some member states' cherished national interests.
EU Council President Herman Van Rompuy unveiled a report that called for the EU's 27 member countries to pool their financial and monetary policies even more than they had done so far to combat the region's financial crisis.
He made the proposal alongside the leaders of the EU Commission, the European Central Bank and the Eurogroup, the gathering of the finance ministers from the 17 EU countries that use the euro.
The report said there was "a need to go further and to put in place a stronger framework for coordination, convergence and enforcement" of policies.
The report will be used as a starting point for debate at next week's summit of EU government leaders as they seek a way out of the financial crisis by further increasing control over banks and the national budgets of member states.
But the ambitious scope of the integration it proposed is likely to rankle defenders of EU nations' sovereign powers who fear a transfer of more authority to Brussels.
The report charts the development that Europe's financial and economic backstops should take over the coming years. It said Europe should have after 2014 a centralized authority that can absorb economic shocks in countries.
The report, which was vague on details, suggested the system would evolve out of Europe's current financial backstops, which include a bailout fund, a nascent banking supervisor and budget checks.
For three years now, the EU has been slumping from one crisis meeting to the next to deal with the problems of debt-ridden countries like Greece. That's because the original setup for the euro currency zone left far too much independence to nations that could piggyback on the initial success of the joint currency and its richer member nations.
Several measures to keep wayward national budgets from undermining confidence in the common currency have already been taken. But the initial flaw of the eurozone — having no way to enforce sound financial and economic decision-making among national authorities — has yet to be fully addressed, the 15-page report said.
After 2014, the 17 nations that use the euro should "also build on an increasing degree of common decision-making on national budgets and an enhanced coordination of economic policies, in particular in the field of taxation and employment," the report said.
While the report seeks to step away from the stop-gap measures that have marked the EU reaction to the crisis, by proposing much closer integration — even beyond the 17 eurozone nations — it pose prickly political questions.
The report, for example, suggests chipping away at the powers of national parliaments, especially when discussing the common interests of the eurozone.
It says "national parliaments are not in the best position to take (the interest of the eurozone) into account fully," and calls for more involvement of the 27-nation European parliament.
That is unlikely to go down well in Germany, the biggest contributor to EU financial bailouts, which has throughout the crisis insisted on the need for parliamentary approval of important decisions.
Britain, meanwhile, has been traditionally opposed to yielding more authority to EU headquarters, and has been joined recently in that call by some of the richer eurozone nations, like the Netherlands and Finland.
The report sets tight deadlines for fundamental progress, something which the EU has found tough to keep to.
Only last Tuesday, the 27 finance ministers remained split on the establishment of a new European single supervisor to keep wayward banks in check, and were forced to squeeze in another extraordinary meeting next week on the eve of the Dec. 13-14 summit of EU leaders.