When Nadia Calviño and Sigrid Kaag appear together in front of the journalists in Luxembourg on Monday evening, their message quickly becomes clear: We are here to break down old fronts in the euro area, and we women are obviously better at it than stubborn men.

Werner Mussler

Business correspondent in Brussels.

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The finance ministers of Spain and the Netherlands had previously presented a paper together that was intended to break open the eternal discussion about reforming the EU stability pact and relaunch the usual dispute between the “thrifty” and those who are willing to spend (or the northern and southern) euro states .

“Two countries come together here that are otherwise always perceived as opponents,” said Calviño.

Kaag added that the eurozone could no longer afford to argue about "alleged differences", especially given the terrible war in Ukraine.

Her counterparts "received quite well" the joint proposal, which was not discussed in the Eurogroup on Monday.

That was not particularly difficult for those colleagues who spoke out, because the paper, which is just two pages long, does not even address many controversial points in the reform discussion.

The Spanish-Dutch proposal contains "many correct elements", said the Austrian head of department Magnus Brunner, another representative of the so-called frugal states.

Brunner left open which parts he meant.

Almost anything is possible

What is clear, however, is that every government can pick out from the paper what it finds particularly important.

The regulatory framework should not prevent states from "investing more, especially in the green transformation," they say - that sounds more southern European.

But it is also important to ensure that government spending is better controlled and that governments are held more responsible for their spending behavior - that sounds Nordic.

The paper is halfway concrete in the demand that instead of the same limit values ​​for national debts and deficits that apply to all countries, each country should be given a spending rule for a certain period of time.

The argument behind this proposal is that there is no point in imposing harsh and unrealistic debt reduction regulations on a heavily indebted country like Italy that it cannot comply with.

Instead, the EU Commission should rather dictate to each country how much it can spend.

However, this requirement must then also be observed and controlled.

The Commission already has a new tool for this: It checks whether and how the Member States spend the money they receive from the new EU recovery fund.

These ideas have been under discussion for some time;

Economic Commissioner Paolo Gentiloni, who intends to present his proposals in the summer, is also thinking in this direction.

The Italian praised the initiative from Madrid and The Hague because it brought a "new spirit" to the debate about the pact reform.

That's good news, said Gentiloni, but otherwise remained cautious.

The commissioner knows that the devil is in the details and that the highly complex discussion cannot be resolved with a two-page paper.

Roadmap to banking union

Gentiloni and the head of the Eurogroup, Ireland's Finance Minister Paschal Donohoe, are happy about the initiative for another reason.

Calviño and Kaag warned their colleagues to finally bring the long-stalled discussion about completing the banking union to an end.

Donohoe wants to present a "timetable" for this by June, which has already been postponed several times. On Monday he called a special meeting of the Eurogroup for the beginning of May.

It is therefore clear that the debate about the redesign of the Stability Pact is likely to quickly turn into a discussion in which the federal government will come under pressure.

When it comes to banking union, Germany is seen as slowing things down in two respects.

On the one hand, the German ratification of the reform of the ESM Euro Crisis Fund Treaty is still pending because the Federal Constitutional Court has not yet ruled on an action against the treaty amendment.

The treaty reform contains the clause that the ESM should in future take over the transitional financing (“backstop”) in an emergency if this becomes necessary in the event of a bank failure and there is not enough money in the SRF Bank Resolution Fund.

On the other hand, Berlin does not want to agree to any mutualized deposit insurance as long as the EU no longer

So there's a lot of discussion that Calviño and Kaag's paper can't get rid of.

In an aside, the Dutchwoman pointed out that the dispute over the reform of the pact is likely to intensify anyway for very pragmatic reasons.

She firmly expects that Gentiloni will propose in May to keep the budget rules, which are currently suspended due to the corona pandemic, longer because of the war in Ukraine and its economic consequences.

The commissioner did not want to confirm this directly, but did not contradict either.

The EU will react to the weakening economy when it presents its authority's spring forecast, said Gentiloni.

The spring forecast is scheduled for mid-May.

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