By Jan Strupczewski
LUXEMBOURG (Reuters) – European Union finance ministers agreed on a small budget for the euro zone as a whole on Thursday, ending two years of talks that exposed their divisions over greater integration after a sovereign debt crisis that nearly destroyed the euro.
The new will provide around 17 billion euros over seven years for the 19 countries using the euro. That leaves it just a shadow of a the original proposal by French President Emmanuel Macron, which called for a budget of several hundred billion euros.
Macron’s version also included assigning dedicated tax revenues to the budget and using it stabilise euro zone economies hit by crises not of their own making.
The idea was supported by the European Central Bank, keen to see a fiscal counterpart to its monetary policy, and by the euro zone bailout fund. The ECB argued it made economic sense and could be done without transfers.
But that was too much for many northern countries, led by the Netherlands, and got lukewarm backing from Germany, still coping with a series of bailouts during the sovereign debt crisis and worried it could encourage free-riding and moral hazard.
“We have a new pillar in the foundations supporting the euro,” the chairman of the ministers Mario Centeno told a news conference.
(Reporting By Jan Strupczewski, editing by Larry King)