The completion of the European Economic and Monetary Union (EMU) and establishment of fiscal capacity for Eurozone members should be the main priorities of the EU, said Portugal’s Prime Minister Antonio Costa on Wednesday while addressing several MEPs.

Costa also warned that the EMU will never reach its full potential if only supported by a monetary pillar. Instead, he urged the political leaders of the Member States to accelerate their efforts in the converging economies of the Eurozone to establish a fully-fledged fiscal capacity. Failure to do so, warned Costa, would leave the EU incapable of addressing future financial crises.

“It is important to optimise the Eurozone as an economic and monetary union and establish its own fiscal capacity in conjunction with the European semester. These instruments could help maintain stability when the EU faces with external shocks,” said Costa.

Anticipating a potential critique from representatives of the Member States, many of whom traditionally support a ‘risk-reduction’ policy over a ‘risk-sharing’ approach, Costa emphasized that a further strengthening of the EMU should not been seen as the establishment of ‘mechanisms for financing national inefficiency’ – a concern shared by Germany, the Netherlands and Finland who fear that the EMU could encourage certain countries to seek a ‘free ride’ on the backs of wealthier Member States.

Costa tried to allay their fears by suggesting that a contractual basis for future relations and the implement of tailor-made reforms for every Member State, ‘according to its structural obstacles’, needs to be established.

“The purpose is to help the country improve its potential growth with quantified and timed targets. We can no longer see the Eurozone as a group of economies competing with each other, but instead view it as an integrated space, where the aggregated value of the Eurozone is contingent on the performance of each member,” said Costa.

The EMU was founded in 1992 as a step towards the further integration of EU Member States economies and implies the coordination of economic and fiscal policies, including a common monetary policy and common currency, for the Eurozone members.