We look at the euro crisis, economic governance and the ”competitiveness pact” in the European Union, or more narrowly in the eurozone.
The BBC's Europe editor Gavin Hewitt described the ”grand bargain” between France and Germany, as well as the member states rejecting at least some part of the internal reforms the ”pact of competitiveness” would entail: France-Germany pact resisted (8 February 2011).
BBC News Europe had an update about the new and permanent fund, the European Stability Mechanism (ESM). The EU members aim to finalise the rules in March, and the ESM should become operational in 2013: Germany talks tough on EU bail-out fund (17 February 2011).
Social Europe Journal
The Franco-German ”diktat” has come in for criticism from different quarters.
In the Social Europe Journal blog, on ideological grounds Andrew Watt argued that both the process and almost all of the content of the Franco-German proposals were to be rejected: From Good-Bad to Bad-Bad (8 February 2011).
On EUobserver, Leigh Phillips noted that the leaders of the eurozone countries aim to hold an extra summit to discuss a proposal from Berlin and Paris that would see European states adopt a common corporate tax base, harmonise retirement ages, eliminate indexation of wages to inflation and hardwire limits on government debt via constitutional amendments. Opposition to the ”competitiveness pact” is growing: Eurozone summit looms amid growing hostility to Franco-German pact (9 February 2011).
Place du Luxembourg
Place du Luxembourg recalled how France and Germany destroyed the original Stability and Growth Pact (SGP), when sanctions should have been meted out to them. The blog post also highlighted Mario Monti's remarks about some of the proposals of the Franco-German ”competitiveness pact” being internal market issues: Euro Update(16): Mario Monti and the feckless Franco-German Pact for Competitiveness (12 February 2011). The blog post ended by a sigh and a wish:
A pity no one in the media seems to have picked up Monti’s comment. It would embarrass Merkel and Sarkozy and hopefully start a debate about the need for enforcement and the necessary roles to be played by the European Commission and the European Court of Justice in order to ensure credibility of commitment in the enforcement of the rules across the board.
There are two further updates of interest on Place du Luxembourg concerning our themes:
Euro-Update(17): Eco-Fin Council – From EFSF to EMS and Portugal (16 February 2011)
Euro Update(18): Portugal in the dangerous month ahead (16 February 2011)
To keep things in balance, not all calls for rejection come from eurozone members unwilling to sacrifice domestic holy cows, or EU countries outside the euro area, afraid of being left behind. Some of the criticism against Merkel is voiced in Germany, the national parliament (Bundestag) and even within her own government.
EurActiv: Merkel faces internal critics on 'competitiveness pact' (updated 14 February 2011).
Gunnar Hökmark MEP
How can anyone expect fiscally responsible states to bail out profligate ones? Some people support German views about reforming public finances.
The prominent Swedish MEP, Gunnar Hökmark (EPP, Moderaterna) wrote an article for the newspaper Sydsvenskan: ”Ny stabilitetspakt behövs i Europa” (10 February 2011). According to Hökmark, reforms are needed on two tracks. Public deficits and debt levels have to be brought under control. Reforms are needed to stimulate competitiveness and entrepreneurship.
Hökmark wants stricter rules for what he calls the new stability pact.
Joerg Wolf, in the Atlantic Review, came out in defence of the German calls for fiscal responsibility, reminding readers of the fable about the ant and the grasshopper: NYT Criticizes German Leadership (10 February 2011).
On Next Finance, Stephen Macklow-Smith asked the crucial question: What would it take to solve the eurozone crisis? (10 February 2011). The European Union tends to be a chorus of voices, not necessarily all in tune. The European leaders need to take decisive action to design mechanisms that are properly funded, flexible, sensible, and not simply focused on ‘punishing’ markets.
Although some suggestions were offered, the big question was left hanging.
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P.S. 2: Political and macroeconomic guidelines emanating (or not) from the European Council at the top are indispensable, but details of internal market reform (Single Market Act) and the Europe 2020 strategy (EU2020 flagship initiatives) are going to be among my recurring themes as well. On my Euroblogs I want to discuss legal and political issues relevant to European enterprises, jobs, employers and employees, consumers and citizens, especially in cross-border situations.
Hopefully my blogs succeed in educating and guiding readers towards relevant sources. For me the blogs offer continuous updating and a discipline of study as basic training for my teaching and legal counseling activities.
My blogs are: Grahnlaw (in English), Grahnblawg (in Swedish) and Eurooppaoikeus (in Finnish), as well as usually downstream the trilingual Grahnlaw Suomi Finland (later, with more sediment).
If we share and interest in the European economy, business, politics or law, we could get acquainted through Twitter @RalfGrahn or Facebook.