Saturday, 19 November 2011

Germany: CDU's next steps in euro crisis

We have looked at some of the differences between Germany and Britain in European politics: the CDU party conference, European values, British Europe as an alternative and Ireland as a risk to much more than treaty reform.

How does the CDU understand the euro crisis, and what does the party propose for the immediate future?


Stability and growth pact

After defending the European values, explaining the benefits of the European Union and the necessity of the euro currency, the resolution adopted by the Christian Democratic Union CDU proceeded to scorn the previous red-green coalition for letting Greece into the eurozone and for failing to meet the Maastricht criteria during four consecutive years, weakening the stability and growth pact (SGP) and the respect for Germany.

Some countries have lived beyond their means and become indebted. They have failed to enact structural reforms in order to become competitive, and their enterprise sectors have been too narrow, based on construction or financial services.


Stability union

The CDU rejoiced that first steps towards a stability union had already been taken [two years into the crisis, my addition]. These are then duly noted: advance budget control (European Semester), strenghtened SGP, rescue packages for Greece, and the establishment of the EFSF to be replaced by the permanent European Stability Mechanism ESM.


Euro Plus Pact

The CDU resolution Starkes Europa – Gute Zukunft für Deutschland underlines that solidarity requires massive reforms for stability and competitiveness in countries needing help.

The Euro Plus Pact is seen as an agreement among 17 eurozone leaders and six other EU members to strenghten the economic union in the EMU, by increasing competitiveness.


Immediate tasks

The resolution set the following immediate tasks within the framework of the Lisbon Treaty:

1) Adopting a constitutional rule for budget balance (Schuldenbremse) of the German type in every euro area member and as a requirement for eurozone entry.

2) Adherence to the rules of the stability and growth pact (SGP) by reduced spending, structural reform and sustainable growth. The structural funds should be focused even better.

3) Each state is responsible for its own finances. Rejection of transfer union and of automatic liability.

4) Rejection of eurobonds.

5) CDU defends the independence of the European Central Bank (ECB) and the Deutsche Bundesbank. Strict separation of monetary policy and economic policy. EFSF reform will allow the ECB to end the purchase of state bonds.

6) The debt crisis must lead to adequate regulation of financial markets and institutions.

7) Global regulation of financial institutions is necessary.

8) CDU wants a global, EU-wide or even a eurozone-wide financial transaction tax (FTT).

9) The CDU wants the European People's Party (EPP) to field a top candidate in the election to the next European Parliament.

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Beyond the immediate tasks, the CDU sees the need to complete the economic and monetary union (EMU).



Ralf Grahn