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On the eve of the European Council (28-29 October), the European Parliament also contributed to the ideas about the economic governance of the Union. euinside has already briefed you on the proposals of the Commission and the Task Force, chaired by the President of the European Council, Herman Van Rompuy. All these contributions will be discussed by EU leaders next week.

The most interesting proposal of MEPs is a special new position of a “Mr. or Ms. Euro” to be created, which should be responsible for the coordination of economic policies in the European Union. It is curious that the proposed post completely takes the job of Commissioner Olli Rehn away, because, as proposed, it should be responsible for economic and monetary affairs and the person to take it should also be a vice president of the European Commission (Olli Rehn is not).

At the same time, however, “Mr. or Ms. Euro” should chair the Council of Finance Ministers (Ecofin), which is currently chaired by the Minister of Finance of the country, which holds the rotating presidency. And also to chair the regular meetings of the Eurogroup, which since 2005 are under the leadership of Prime Minister of Luxembourg Jean-Claude Juncker. “Mr or Ms Euro” should attend the meetings of EU leaders and will represent the EU in international organisations dealing with economic and financial issues.

Obviously, the MEPs are inspired with the post of Catherine Ashton - EU High Representative for external relations, which is both Vice President of the Commission and is chairing the Foreign Affairs Council. So obviously the proposal is an attempt to create a similar „hybrid” post, which to have more influence on the Council (Member States) in terms of economic and financial matters.

At the same time, with the obvious emphasis on the euro, another request (especially French) is also satisfied: the economic governance of the euro area to be institutionalised and to have a separate leader. The European Council president Herman Van Rompuy was mentioned before as a possible candidate for this job.

Although the Parliament supported this new position, its creation will require changes in the Lisbon Treaty. This is another sign that such a prospect is getting more likely, after the Franco-German call for treaty amendments. Paris and Berlin insisted on these changes, in order a permanent crisis mechanism to be established and political sanctions on eurozone countries to be introduced, when they violate the principles of Economic and Monetary Union.

Regarding the crisis mechanism, MEPs propose the mechanism to be institutionalised into a permanent European Monetary Fund. It should be “based on a Commission analysis, so as to make the current European Financial Stability Facility permanent. The Commission is also asked to assess the feasibility of a system for issuing European bonds.” The idea for a European Monetary Fund was launched this spring and it has the special support of Germany.

As expected, the MEPs' favourite financial transaction tax (FTT) is also present among their priorities, but there is a slight mitigation of their position. According to Parliament, “such a tax ought to apply as broadly as possible, but, failing that, it should, as a first step, be applied at least at EU level.” FTT is one of the options which are being considered by the Commission as a possible common European tax being a source of own resources in the European budget for the next programming period.

European Union leaders will have the difficult task to discuss all these proposals at the Council next week. It is unlikely that they would announce their positions on all issues, but at least we will know which of the ideas will continue to be a subject of future discussions, as well as what are the basic positions of the Member States. As we have repeatedly forecast, this will be a heavy and decisive Council. euinside will be there to inform you about the important decisions and colourful details from the summit.