MNI INTERVIEW: EU Should Keep Unanimous Votes - ONB's Kolm

A senior Eurosystem official has spoken out against proposals to resolve the impasse over the EU's EUR750 billion Recovery Fund plan by moving to majority voting on the EU budget, in comments to MNI which underline the difficulty of finding a solution to the dispute which satisfies all EU states.

Austrian National Bank Vice President Barbara Kolm said in an interview that unanimous voting on budget and taxation policy should not be abandoned in favour of decision-making by a majority.

"Even if the process takes longer with unanimity, it is better – there shouldn´t be a dominance by certain countries," she said

The German EU Presidency and the European Parliament are actively for a resolution of the dispute prompted by Hungary and Poland's veto of the seven-year EU budget.

Kolm[dt1] said she felt obliged to speak out, given that there was a danger that majority voting on the budget could be the solution which leaders opt for.

"If you see what France and Germany are aiming at currently and convincing certain other countries of … then they might be successful," she said, adding that unanimous voting underpinned Europe's diversity.

"We all believe in the efficiency of the division of labour, so why should we not allow countries to pursue their own policy ideas. If a policy is successful in one country, then at least we can try copy and paste."

"One size-fits-all policies never fit all countries."

ECB THE FIRE BRIGADE

Kolm rejects ideas that the EU should impose its own taxes and issue its own debt, a prospect that had been welcomed by some ECB officials as a way of easing the burden on monetary policy.

"ECB is doing a lot and, by doing what they have done so far, they have been the fire brigade," said Kolm.

"But I don't think talk of the European Union raising its own taxes and creating their own debt system – that should be a national task, not a task for a supranational body – this would harm the concept of independent states."

Applauding the reform achievements of the Greek government, which have helped steer the country through the Covid crisis, Kolm laid the blame for the current fiscal predicament of some high-debt states, like Italy, on their failure to implement structural and economic reforms.

"I think they should go in this direction," she said, referring to the example set by Greece, although she was doubtful if Italy in particular would do so, saying "More likely the can will be kicked down the road for some more years."

NO DEBT CANCELLATION

Some Italian politicians have recently mooted the idea of debt cancellation as a way of reviving the economy post Covid, but Kolm said that this would be a disaster.

"Italian government debt totalled €2,410 billion in 2019, one quarter of government debt in the eurozone. Two thirds of Italian debt was held by Italian investors, so if you cancel it would be a disaster for local investors, including banks and insurance companies."

Kolm is hopeful German Chancellor Angela Merkel will be able to broker a compromise over the budget. But, asked about one alternative solution which has been proposed - an EU declaration reassuring Poland and Hungary that the Rule of Law mechanism would only be activated in situations where there was a very serious and specific case of a breach, Kolm suggested this may not be found credible.

"Given the experience certain countries have had with promises made by Brussels in the past, I think they will have to give some ground in order to win that trust back."

EU officials have suggested that a deal could be agreed at the Dec 10-11 summit in Brussels, which will bring leaders together on a face-to-face basis.