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EU quest to save euro raises fear of ‘two-speed’ Europe

BRUSSELS, October 20, 2011 (AFP) – At a summit Sunday to chart an escape route from Europe’s sovereign debt crisis, European Union leaders will look at ways of putting a single pilot in the seat to steer the 17 nations that share the troubled nearly 13-year-old currency back to economic health.

But any decision to tighten economic governance and budgetary discipline will leave 10 of the EU’s 27 nations sitting on the outside, including four — Britain, the Czech Republic, Denmark and Hungary — which to date have refused to join the euro-club.

"The federal core which is needed to save the euro means inevitably a less engaged periphery," Britain’s Andrew Duff, a member of the European parliament, wrote in the Financial Times this week.

"The outcome will be not just a two-speed Europe, which we have had for years, but a two-tier Europe in which the UK is in a minority pursuing different objectives," he warned.

The warning came as British MPs next week prepare to vote on whether to hold a national referendum on staying or leaving the bloc — or negotiating a looser relationship based on trade and cooperation.

Faced with growing euro scepticism at home, British leaders in the last weeks have denied plans to repatriate, instead calling for stabilisation of the eurozone in London’s own interests.

"A successful EU is impossible without a successful eurozone," Deputy Prime Minister Nick Clegg told The Economist last month. "It’s good for all of us, whether you’re in the eurozone or not, to make sure that it doesn’t lead to a fracturing."

So a European finance minister? A super-commissioner? The October 23 summit is expected to explore a range of new governance ideas on the table and for the least approve one, a French-German call for the appointment of a "Monsieur Euro" — EU president Herman Van Rompuy.

If agreed as expected, according to EU sources, Van Rompuy would not only preside EU summits but would, with the help of new staff, organise twice-yearly eurozone summits aimed at streamlining policy decisions between the 17 to avoid a replay of the contagion currently threatening the entire zone.

The move would underpin new rules to be agreed at the summit to force states to submit their annual budgets ahead of passage and to slap sanctions on offenders.

But the idea of a "Monsieur Euro" is not to everyone’s liking.

The European Central Bank has called for a European finance minister, but that seems impossible in the short-term as it would require a painful change in the bloc’s founding treaty.

Fed up like many other EU states with diktats and done deals from Paris and Berlin, the Dutch favour a new super-Commissioner to prevent states going off the economic rails.

"The European Commission needs to play a strict and independent role in this, identifying the inherent weaknesses and risks of national economies," said Dutch Economic Affairs Minister Maxime Verhagen.

Whatever the outcome, friction between the "ins" and the "outs" is on the increase.

Eastern power Poland, which currently holds the rotating EU chairmanship, has given a cool reception to the idea of closer integration of the 17 eurozone members, pointing to the risk of a two-speed Europe — despite the fact it is in no hurry to adopt the single currency.

"But do you prefer a two-speed Europe or a no-speed Europe that gets stuck and then collapses?" retorted Poland’s central bank chief Marek Belka.

"If today the best way to save the eurozone is further budgetary integration, or even political integration within the framework of some kind of federalism, then we cannot prevent it and we should not protest against it," he added.

Analyst Thomas Fischer, of the Bertelsmann Stiftung foundation in Brussels, took the argument a step further in a comment this week, arguing that now was the time to drive growth rather than austerity and "to take a daring qualitative leap of further integration".

"What we need is, first of all, a more courageous approach — including the establishment of a European Treasury as well as a much stronger coordination of anti-cyclical economic policies."

"We should also take into consideration whether the time has come for a two-speed Europe. A treaty change procedure enabling those member states, which ratify them, to go ahead would be the most pragmatic way to set the new course of integration."


AFP/ Claire Rosember/ Expatica