MNI ANALYSIS: Eurozone FinMin, A Case Not Of If, But When

--Macron's Greek Eurozone Reform Push To Gain Traction

--Moscovici Keen, Merkel Maybe, Draghi Yes Please

By Tara Oakes

     BRUSSELS (MNI) - Never one to shy away from drama, French President

Emmanuel Macron launched his pitch for a new, "more democratic" Europe as the

sun set over the Pnyx hill, birthplace of democracy itself.

     It is easy to bandy around classical allusions for a country so steeped in

history and literature: the debt crisis was always the "Greek tragedy" in the

lazy shorthand of many journalists.

     But where is the hamartia Aristotle sought in tragedy: the fatal error from

which the downfall springs? In Greece, or in the Eurozone as a whole?

     For Macron, facing falling approval ratings and international amusement at

his E26,000 make-up costs over three months, time is ripe for a personal and

continental relaunch. His argument that the flaws in the European Union can no

longer be merely painted over resonates in Greece, still crippled by the highest

unemployment rate in the single currency area.

     According to figures released by ELSTAT Thursday, seasonally adjusted

unemployment for June 2017 stood at 21.2%: down from 23.5% in June 2016, but

still worryingly high. 43.3% of 15-24 year olds and 26.8% of 25-34 year olds

remain unemployed, according to the figures.

     But with ECB President Mario Draghi's speech Thursday recognising that the

euro area's "economic expansion ... continues to be solid and broad-based across

countries and sectors", increasing calls are coming to make hay while the sun

shines and speed up with much-needed reforms to prepare for any further crisis.

     Macron's fellow countryman and European Commissioner for Economic Affairs,

Pierre Moscovici, hailed Eurostat figures released Thursday showing seasonally

adjusted GDP up by 0.6% in the euro area in Q2 2017 and by 0.7% in the EU28 as a

whole.

     "Today's figures confirm that the EU economy is growing strongly. Now we

must ensure that everyone benefits!," Moscovici tweeted.

     Moscovici himself caused a ripple in the Brussels bubble when he went

decidedly off-piste as the September session kicked off, denouncing a "massive

democratic deficit" in the Eurozone. The rescue of Greece amounted to little

more than a "democratic scandal", he said in Italy.

     The solution? In an interview with Corriere della Sera published Sunday,

Moscovici stood firm in his desire for a Eurozone budget, a Eurozone governance

system and a Eurozone finance minister who would merge the jobs of Eurogroup

President and ... his own commissioner's post.

     Draghi also is keen on greater fiscal integration across the Eurozone.

Questioned about it during Thursday's post-Governing Council press conference,

he said it was important that member states had realised "how incomplete our

monetary union is at the present time and how such incompleteness has made the

crisis that we are just coming out of more serious than it would have otherwise

been."

     He welcomed the fact that member states were discussing the issue but noted

the task of discussing and reforming monetary union was not the ECB's task.

     "It's going to be a certainly complex discussion that will take place in

the coming months. The ECB of course stands ready to help in this discussion but

we are not party of this," he added.

     Current Eurogroup President Jeroen Dijsselbloem is keen to keep his own

post for the foreseeable future, despite the fact that he is set to lose his job

as finance minister in the Dutch government if four-party coalition talks

finally succeed in the coming weeks, as is widely expected.

     The Eurogroup itself remains an informal grouping, with some hoping that

the creation of a more official finance minister for single currency member

states would ensure a level of democratic visibility and accountability lacking

in the current arrangement.

     At the annual meeting of influential economic think-tank Bruegel in

Brussels Thursday, a panel of experts agreed that the question of a Eurozone

finance minister was now not if, but when.

     "There's a lot of talk about multi-speed Europe, but the reality is that

the Eurozone has to have a single speed by itself," Morgan Stanley's Vice

Chairman for Sovereigns and the Official Institutions, Reza Moghadam, said,

adding that a finance minister who could think of the zone as a whole would

allow them to cover "big shocks, not small shocks".

     Bruegel's own director, Guntram Wolff, told the same panel that increasing

acceptance of the idea of an EZ finance minister didn't solve the basic

questions about what they and their new euro-area budget, or fund, would do; his

comments echo a paper he authored in May reminding stakeholders that further

fiscal union developments: "will have profound implications for the legal order,

for economic resources and for moral hazard" and require careful debate and

forethought.

     The pace on this debate will need to be stepped up as the refuelled

Macron-and-Merkel Franco-German engine revs up after her increasingly inevitable

looking win in upcoming federal elections.

     Macron's enthusiasm for the new role is well-known as part of his

Jupiterian -- or in Athens, Zeus-thundering -- plans for a shakeup of the bloc.

Angela Merkel said in August she "could imagine" the creation of the ministerial

post, refusing to resolutely commit to what may end up as an unpopular domestic

option.

     Moscovici's conscious self-positioning for the role could also create

rumbles of discontent in other member states, who are increasingly unhappy with

France and Germany's dominance in the bloc. But the emergence of "who" questions

show an increasing acceptance of the premise itself, even if details are yet to

be hammered out.

     Greek tragedy as a genre reflected struggles with the birth and growth of

fifth-century Athens' monetary economy. "I have been bought and sold!",

Sophocles' Philoctetes laments when he learns of his betrayal: anathema for a

Homeric hero who cannot conceptualise how to function in a capitalist system.

Greece, and the Eurozone, are increasingly having to accept the reality that

monetary union will have to be completed with fiscal union to protect against

dramas yet to come.

--MNI Brussels Bureau; +44 203-865-3851; email: tara.oakes@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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