Eurozone powers and limits (Updated)

Admittedly, the decisions by the governments of Italy and Spain and the the consequent interventions by the European Central Bank in the secondary bond markets brought relief to these Mediterranean countries. The president of the European Council welcomed the decisions:

Herman Van Rompuy, President of the European Council, welcomes the decisions taken to strengthen fiscal discipline and growth; Brussels, 8 August 2011 (EUCO 58/11)

However, stock markets generally and on Wall Street plunged on Monday (Deutsche Welle), and Asian stocks continued tumbling on Tuesday (BBC News).

Thus, the global outlook has taken a turn for the worse.


Eurozone

Reiterating the need for speedy adoption and implementation by the euro area member states of the decisions of the 21 July 2011 eurozone summit is not going to stop contagion in its tracks.

In a 3 August 2011 note Why Spain and Italy are under attack and how to defend them, Willem Buiter (Citigroup) discussed the need for structural reform in the product and labour markets of Spain and Italy, the shortcomings of the EFSF and the need for the ECB to intervene. Italy and Spain have reacted, the European Central Bank has acted, but the remaining flaws of the improved EFSF and ESM seem to be off limits for European politicians.

President José Manuel Barroso's letter to the heads of state or government of the eurozone countries has been suspected of bad timing (FT Brussels blog) and accused of causing the bond market plunge (BBC Business News, before update). Most of all, Barroso's letter has met with rejection from European political leaders and their spokespersons.

The European leaders have much on their plate, as they try to calm sentiments, secure passage of the agreed measures, explain complex issues to increasingly distrustful publics and to remain electable.

However, in the long run the refusal of the governments to embark on an open discussion about the political and economic fundamentals of the economic and monetary union (EMU) may end up doing more harm than good.

Only a federal solution can provide the Union with the effective tools it requires, declared the liberal leader Guy Verhofstadt.


Update 9 August 2011: Stanley Pignal on the FT Brussels blog has an entry about Otmar Issing's opinion piece in the Financial Times. Democratic legitimacy is the sine qua non for the political and fiscal union Europeans and their euro need, is my reading. Let's get talking about taking the right decisions at the right level, in a democratic manner.



Ralf Grahn

EU Commission President: Facts and speculation Barroso vs Verhofstadt

If the European Council 18 to 19 June 2009 nominates José Manuel Barroso, by a qualified majority, to become President of the Commission, the matter appears before the newly elected European Parliament for approval.

Under the Treaty of Nice, still in force, the approval requires a simple majority (Article 214 of the Treaty establishing the European Community; TEC).

The political groups in the European are not fully formed yet, but with 264 MEPs the biggest group, the European People’s Party (EPP) is still far from a majority for Barroso.

The official Election results are somewhat behind the events with regard to the groups, but offer the main facts.




Rainbow coalition?

In principle, a rainbow coalition of the Left, ASDE (ex PES), the Greens and ALDE (Liberals) would now have 347 votes, after the Italian Partito Democratico joined the renamed Socialist Group.

This is fairly close to a majority of the representatives (369), but it still looks like a chimera, even if Barroso is seen as a weak choice by swathes of politicians and public opinion.

Many socialist and liberal MEPs belong to national parties led by heads of governments behind a re-election of Barroso.

British, Spanish and Portuguese PES representatives were among these long before the European elections. Only the Democrats part of ALDE has indicated that it will vote against Barroso. Other groups and individual MEPs might fall into line with the nomination by the European Council, possibly unanimous.

Without clear indications to the contrary, there is no pot of gold at the end of this rainbow, although a secret ballot offers MEPs with reservations about Barroso the chance to defy their national party leaders by voting for Guy Verhofstadt.


EPP plus?

The ‘European Conservatives’ of the UK Tories, the Polish Law and Justice Party (PiS) and the Czech ODS have 49 MEPs at the moment, but we are still waiting for the announcements on further recruitment among the remaining 76 MEPs (provisionally classified as Others, UEN, IND/DEM).

In theory, these presently unsorted MEPs could boost the EPP vote to 389, and it is possible that many among the 125 nationalists, anti-federalists and others prefer Barroso as the lesser evil.

However, some of them are rejectionists at heart, with scant inclination to vote constructively. For Barroso and the heads of state or government it would be an embarrassment to have the Commission President carried into office on the votes of ultra-nationalists, xenophobes and fascists.

Therefore, expect the members of the European Council to lean on MEPs to pre-empt a rainbow coalition.


Ralf Grahn

Barroso vs Verhofstadt: President of the EU Commission

News services report and Euroblogs discuss the next President of the European Commission. Here are a few examples:


• The European Citizen: Parliamentary Shifts and Whatnot



• Julien Frisch: Make Guy Verhofstadt the next European Commission President!



• Stephen Spillane: Deadlock in the new Parliament?



• Stephen Spillane: It finally gets interesting: Barroso vs Verhofstadt


• EurActiv: Support growing for Verhofstadt to replace Barroso



• EUobserver: Barroso urges EU states to appoint new commission president next week



• EUbusiness: France, Germany back EU’s Barroso ahead of summit




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I will return with some facts and speculation on the Barroso vs Verhofstadt issue.



Ralf Grahn

European elections: Verhofstadt or Barroso?

On the web pages of the Union of European Federalists (UEF) Guido Montani writes Who is my candidate? (19 May 2009).



After discussing the post of the President of the Commission, Montani concludes:


“We can say something more. Verhofstadt is in favour of the United States of Europe. He is in favour of a federal budget, a federal foreign policy and the removal of the veto right. A public debate, in the European Parliament, on the choice of the President of the European Commission is also a debate on the federalist future of the European Union. Therefore, I have no doubt. If there is the possibility to choose between Barroso and Verhofstadt, I choose Verhofstadt and at the next European election I will vote for a European party supporting Verhosfstadt as the next President of the European Commission.”


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Guy Verhofstadt

Here is Wikipedia’s article on three times Belgian prime minister Guy Verhofstadt (last modified 10 May 2009).



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“It’s your choice”


We citizens of the European Union have been told about the European elections that our votes matter and that the kind of Europe we want is our choice.

In my view, Guy Verhofstadt is the most credible candidate put forward to date as an alternative to José Manuel Barroso.

Heads of state or government may have trumpeted their preferences long before they listened to our voices or counted our votes, but political parties, MEP candidates and EU citizens are not bound by their deals.

What we need now is clear information about the possibilities to vote for parties or candidates who support Verhofstadt.

Please, comment in order to give citizens a choice.


Ralf Grahn