What Europe will look like in 25 years from now may well be determined earlier than that. Let’s fast forward to late March 2017, the 60th anniversary of the treaty of Rome that established the European Economic Community.
On March 25th, 38 European leaders are gathering in Rome, 28 of them from EU countries and 10 more from Norway, Switzerland, Serbia, Bosnia, Albania, Iceland, Northern Macedonia, Turkey, Montenegro and Kosovo. The EU leaders are there to sign a new European treaty while others are negotiating the final stages of EU membership and therefore express their intention to sign the treaty upon accession before 2025.
This second Rome treaty provides for two types of EU membership – one for countries that fulfill the criteria of and have chosen to be part of the eurozone, and the other for those that retain their national currency, such as the United Kingdom, Sweden and Turkey among others. By 2025, all 38 countries are expected to be members of the larger EU, and a referendum in the UK has just endorsed the UK’s membership of the non-eurozone group.
The 2017 treaty restructures the European Institutions to reflect the flexible nature of the new Union, and follows the model set up long ago by Ecofin, the EU finance ministers’ Council, and by the Eurogroup of eurozone finance ministers. The various European bodies will thus meet in two modes, depending on the subject at hand. The European Parliament, for example, will meet with all members participating each time the issue to be discussed or voted on does not concern topics, agreements or laws that apply only to the eurozone. On those issues, only MEPs from eurozone countries will participate. This smaller scale “eurozone parliament” will also include some national parliamentarians, notably the heads and deputy heads of the budget and finance commissions.
The President of the European Commission, along with the EU foreign minister,will be elected by the European Parliament upon nomination by European political families, and then endorsed by the European Council, but through weighted voting
The eurozone will have its own eurozone budget, financed by two percentage points of national value added taxes. It will have a banking union with supervision by a structure within the European Central Bank (ECB), a eurozone-wide deposit insurance system financed by contributions from eurozone financial institutions, with a back-stop from eurozone member governments. There will also be a eurozone-wide bank resolution mechanism involving a combination of national and eurozone resources. The national budgets of eurozone members will first have to be submitted for comments and suggestions to the eurozone’s own “finance minister”, a position created by the new treaty. Once finalised, they will have to fulfil prudent but anti-cyclical fiscal targets consistent with an overall long-term debt-to-GDP ratio limit for all countries, progressing toward 60% for those exceeding this percentage. The eurozone’s finance minister will sign off not on the details of national budgets but on their conformity with aggregate commitments to the eurozone.
The eurozone budget itself could finance about one third of a harmonised unemployment and hardship insurance system throughout the eurozone. Another part of the eurozone budget could finance support for youth employment insertion schemes. The eurozone budget is proposed by the eurozone’s finance minister and then endorsed by the Eurogroup of national finance ministers through weighted voting, and finally voted on by the eurozone parliament.
The eurozone’s finance minister is to be elected by the eurozone parliament, and candidates must be nominated by at least 50 parliamentarians from at least a third of eurozone countries. To be elected in the first round, a candidate must obtain 60% of the vote, while in further rounds a simple majority is sufficient. All eurozone members are also members of the Schengen zone, but not necessarily vice-versa. These are some of the most critical institutional features of the new eurozone.