REPEAT: MNI I'view: Brexit Impasse Is "Temporary" - Moscovici

Repeats Story Initially Transmitted at 21:00 GMT Oct 15/17:00 EST Oct 15

--No "Malaise" With UK's Hammond, "Enemy" Comment Withdrawn, Moscovici Tells MNI

--Taking EU Budgetary Surveillance From EC For Strengthened ESM "Absurd"

By Tara Oakes

     WASHINGTON (MNI) - Despite the realization that the European officials are

not going to recommend that sufficient progress has been made in early Brexit

negotiations to advance to the next phase, there was hope that progress was not

permanently stalled, European Commission Economic and Finance Commissioner

Pierre Moscovici told MNI in an exclusive interview Saturday.

     "What I hope is that we will get out of the temporary impasse which we are

now in," Moscovici told MNI.

     "For that, we need to get back to the strong logic of the negotiation.

First, let's resolve the concrete problems on the table, then discuss the future

relationship between us," he said, sticking to the EC's party line on two-stage

negotiations.

     Following an end to a week when UK Chancellor Philip Hammond, one of the

least eurosceptic members of the Conservative government, called the EU the

'enemy' in current negotiations, Moscovici acknowledged that Hammond had stepped

back from those comments.

     "I had a private meeting with Phil Hammond. He withdrew these words,"

Moscovici said.

     "We have no malaise between us. Not at all. He's for us, for me in

particular -- being with him in ECOFIN and all those meetings -- he's the best

interlocutor we can have," the commissioner added.

     The EU commissioner's seal of approval may not sit easily for Hammond back

home, where he is now under fire from all sides: from hardline Brexiteers for

being too dour about leaving the bloc, and from Remainers for branding the Union

as an "enemy".

     It may also be a sour label for Brexit Secretary of State David Davis, who

is the UK's official interlocutor in the currently-stalled talks.

     ESM TO EMF

     If the UK are breaking away, the EU is trying to consolidate its remaining

member states with renewed vigour.

     One topic with growing momentum is the likely transformation of the

European Stability Mechanism into a sort of European Monetary Fund, discussed

earlier this week at Eurogroup.

     But member states differ significantly on how this should be achieved, with

Germany publishing a "non-paper" nudging the possibility of more budgetary

surveillance powers for the ESM under reforms.

     Moscovici told MNI that although he would not comment specifically on

Germany's "non-paper", the idea of moving powers away from the EC on the matter

were "absurd".

     "The Commission must absolutely keep its competencies as far as budgetary

surveillance is concerned. It would be backtracking to come back on that. It

would also require change of the treaty. That's not appropriate," Moscovici

said.

     "It's absurd to try and eliminate the role of the Commission in that whole

process, because we are the ones who play in the sense of the general interest,"

he added.

     Moscovici has pushed repeatedly for more democratic accountability at the

head of the Eurogroup, including the merging of his own office with that of

Eurogroup head to create a "double-hatted" eurozone finance minister accountable

to the European parliament.

     The departure of current Eurogroup head Jeroen Dijsselbloem from any

democratic accountability to a well-paid advisory role at the ESM later this

month is a temporary aberration in this long-term goal, Moscovici said.

     "The present situation is not a long-lasting situation," he said.

Dijsselbloem is set to leave the Eurogroup presidency in January, although he

steps down as a Dutch parliamentarian on Oct 25.

     GREECE

     The Eurogroup's lack of accountability came into the spotlight chiefly as a

result of the Greek crisis, with the third programme set to wrap up next summer.

     Greek Finance Minister Euclid Tsakalotos told MNI earlier Saturday that

they could complete the bailout programme with or without the IMF - something

that, for Moscovici, was "no use discussing".

     "The IMF is there. And the IMF is a strong partner since the beginning. So

that's a point that must not be on the table," Moscovici told MNI.

     "But it also implies, of course, that everybody goes in the same

direction," he added.

     Creditors are waiting for Greece to implement many of its promised reforms

before breathing any sort of sigh of relief that the saga is over.

--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