The European Union surely has had better moments. What first entered centre stage with some troubling fiscal gaps in Greece’s budget in late 2009 has now turned into a much more sustained challenge for the continent itself – and equally for the rest of the world. However, things are still undecided. At this time people can probably argue with equal justification that we are nearing the end of the downward spiral or that things continue to get much worse if and when a Euro-zone break-up eventually occurs.
I tend to be an optimist and I am convinced that within a few years things will become better than they were before the crisis. This essay sets out the justification for my optimistic perspective and, if realised, what repercussions the optimistic evolution would have for Europe and the rest of the world. It will look at a ‘return of Europe’ and will suggest the implications it has on three dimensions, namely the economy, Europe’s role in the world and the evolution of its identity. These three dimensions shall be analyzed along a chronological perspective, starting with the origins of the crisis and the structural context, recent and current developments with a lasting impact on Europe and eventually an outlook of Europe’s perspectives beyond 2014.
It wasn’t us…
Since the global financial crisis hit Europe, the prevailing narrative Continue reading →
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 →
Aus Reihen der Grünen Europafraktion ist am 5. März ein Diskussionsbeitrag zur Griechenland-/Eurokrise veröffentlicht worden. Hierin gehen die Autoren Rebecca Harms, Reinhard Bütikofer, Sven Giegold und Jochen Denkinger auf die Probleme Griechenlands ein und skizzieren Antworten auf die derzeitige Krise. Insgesamt ist das Papier sehr gelungen, weil es die grundlegenden Probleme analysiert, richtige Fragen zur Entstehung der Krise stellt und kurz- wie mittelfristige Antworten bietet.
Drei Punkte sind mir allerdings im Diskussionsbeitrag aufgefallen und sie verdienen Klarstellung, Diskussion bzw. Widerspruch, weil sie nicht nur hier sondern auch in anderen Debatten immer wieder aufkommen und entweder nicht zielführend sind oder als Grüne Sprachblasen nicht vom Zitat in die Umsetzung kommen: 1. der flexiblere Einsatz von Strukturfonds, 2. das Einfordern von Sozialkürzungen in Griechenland, 3. die Forderung nach einer EU-Wirtschaftsregierung.
Ich hätte mir auch gewünscht, dass es ein noch expliziteres Bekenntnis zum Euro 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.