Market pressures on ailing Euro-zone countries persist and the Merkels and Sarkozys struggle to find an answer. The latest hype gaining ground is the idea of Eurobonds. These would be jointly issued bonds by all Euro-zone (or even EU) governments to finance government debt by national (or sub-national) governments.
Ironically, I remember several interesting discussions with my Italian federalist friends who have always lobbied within JEF and UEF to support the introduction of Eurobonds – to allow the EU (budget) to run deficits primarily for EU-wide infrastructure projects. I have always (and continue to) oppose this idea because I think we do not need another layer of debt in the EU while there is sufficient room for mobilising funds to invest in EU-wide infrastructure projects from the ineffective CAP and structural policy – and where necessary also from national coffers. While the financing mechanism for these Eurobonds would be the same, the current discussion is promoting Eurobonds on a very different level.
Eurobonds to solve the debt crisis
Eurobonds as advocated these days are seen as a tool to lower borrowing costs for peripheral Eurozone countries (Greece, Ireland etc.) who struggle with run-away interest rates on newly issued debt. They are practically cut off from the market, hence EU intervention mechanisms like the EFSF are now used to finance their debt. In some ways the EFSF is not so much different from the Eurobonds discussed today except the fact that the EFSF is primarily seen as a crisis intervention – and not a permanent – vehicle. Because (just like with the EFSF) Eurobond debt is guaranteed by countries like Germany or the Nordics borrowing is cheaper for such jointly guaranteed Eurobonds. So, why should we not issue Eurobonds Continue reading →
The financial crisis is far from being over, but what is interesting is that governments and the EU Commission are getting more innovative in using all means at their disposal to fight back. Commission President Barroso is announcing a “comprehensive European Union recovery plan ” for 26 November. If this will go as far as the Delors plan from early 1990s is another question though.
What really surprised me, however, was the reaction to the crisis in Hungary. Undoubtedly, after the first shock wave has dealt (well…?) with by the big western member states, it became high time to turn east now. Here Hungary is worst hit so far, so a massive rescue package has been prepared over the last days (read FT). It consists of 12.2 bn Euro from the IMF, 1 bn Euro from the Worldbank (the already provided 5 bn Euro credit from the ECB) and 6.5 bn Euro from the EU. Now the latter point is really interesting because the EU is invoking article 119 to step in. Even more surprising to me is the (first ever?) issueing of “Euro bonds” to finance the EU’s side of the Hungarian rescue package. Making use of such bonds has long been the demand of UEF. But their consideration were circling more around a general infrastructure back-up and investment programme and less of a concern for crisis intervention. If the bond move works out, it could set a worthy precedence for future intervention.
Die Ratsverordnung “zur Einführung einer Fazilität des mittelfristigen finanziellen Beistands zur Stützung der Zahlungsbilanzen der Mitgliedstaaten” ist hier als PDF verfügbar.
Some people are complaining that Germans are taking over these days. My first feelings towards the EU Presidency are somehow German and still so European: the shocking climate review has just been published and I have not seen a single TV news without talk about new ecological measures. Better late than never, I would say. But when you look at what actually happens inside the country holding the Presidency, you wonder what kind of world Merkel & Co live in.
Surely no other industry still plays such a symbolic role as the car industry inside Germany. At the same time no other industry sector (together with airlines) has been as blind on climate change as German car makers, which have consistently managed to gear up their fleets both in average engine power and CO2 emissions. But when the world and the European Commission finally start to take climate change seriously, we can see a very European pattern evolving. National champion industries (here: Germany’s car industry) send a big letter to the government – and all the EU has to stand still. How familiar, but how very European is this behaviour? – “All politics is local” they say.
Commissioner Wallström had invited this morning some of the big Brussels-based NGOs to a stakeholder discussion (among them JEF) on the Communication policy, the upcoming “Berlin Declaration” as well as the general way forward with the Constitution (at least this is what the invitation said). However, in their introductions Wallström and a surprise visitor Barroso focused on the Berlin declaration. The Commission president repeated the five issues he was presenting already in the EP last week in reply to Merkel’s presidency presentation: solidarity, sustainability, accountability, security and Europe’s global role.
The 20 or so representatives then commented on the Berlin Declaration, explained how important their issues are etc. Most of it was somehow expected, things I could pretty much agree with but without the concrete spice where I would have said that this is a thing I would find new. I guess poor Wallström and Barroso as well as their 10 or so staff were listening to these arguments not for the first time. After a couple of interventions – and as the last one before Barroso had to leave – I tried to take things from a more ambitious, institutional perspective. Here is roughly what I commented: Continue reading →
This weekend was a good one for Europa-Union Deutschland (EUD). The 60 year anniversary of Europa-Union’s foundation in Syke in 1946 was celebrated in the very same village near Bremen yesterday. Apart from the less exciting but still positive remarks and contributions by various politicians (exclusively male!!), the real high point was a speech by Swiss Europhile Adolf Muschg. It has not happened very often that such a bright observer of European integration addresses our organisations. I was very excited about Muschg’s speech and its positive welcoming.
Sunday then saw the typical resolution business, panel debate (again all male) and Verbandsgeschäfte. But the real breakthrough for EUD and the years to come is the election of Peter Altmaier as new president. He is probably one of the most knowledgeble EU experts in Germany, he has always sticked to his European and federalist believes even when this did not always suit best his political career. But more than that I value his real commitment from the first times I met him. Back in and around 2002 he was of great help to establish and run the intergroup Constitution in the Bundestag. And on top of that was happy to hang out for beers with us afterwards. If any politicians has shown that he is a man of this movement (and beyond that a great friend of JEF), then it is Peter Altmaier. Congratulations to him for obtaining 97% of the votes and the trust of this organisation (some more information in EUD’s press release). JEF-Europe will happily work together you Peter in the months to come and we are looking forward to see him on our activities during the German presidency.
When I was sitting at the back-benches I was wondering why Altmaier stayed so close to our Bavarian Baron von Cetto. Have a look at this: