Contracts, Schmontracts

So much for the “binding” economic-reform contracts once championed by Angela Merkel. The German chancellor’s game-changing idea, back in 2012, was for European governments to make contractual, legally enforceable pledges to fix things like their labor markets or social security or healthcare systems.

From the German perspective, the idea became less brilliant when the French et al. insisted on some payola in return. Nothing wrong with committing to reforms, they reasoned, as long as there is some European money to cushion the impact of implementing them.

Still, Merkel let the planning go ahead, agreeing to rustle up some pocket change in the future (defined as 2013-2014) to help bankroll reforms. The European Commission did its part in March, brainstorming how the contracts and funding arrangements might work. The stage was set for the June 27-28 European leaders’ summit to set a “time-bound roadmap” for turning the contracts into reality.

Now we learn that time has become unbound. The draft summit communique, nimbly obtained by my colleague Rebecca Christie, downgrades the contracts to just another idea worth mulling over on a rainy day. While there is a “degree of convergence” on the “key principles,” the draft says, “further work is required on these issues in the coming months.”

Whether the idea is dying a slow bureaucratic death or is merely comatose remains to be seen. But for now the cash-for-reforms proposal is yet another casualty of Merkel’s refusal to embark on EU initiatives before the German election in September.

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