The last two decades were very good for you. You were able to unify your divided territory and your people. You had your fair deal of growth and expansion of trade. You began to “normalize”, as experts say.
Today you have to solve a great problem. It is up to you to decide whether the eurozone project lives or dies. I will not go into the details of the problem and the possible solutions. In any case you know very well what is at stake and what the options really are.
But why should you choose to save the euro? Well, two reasons spring to mind. First, a breakup of the eurozone will be very messy and will likely hurt your banks, pension funds and ultimately – your own citizens. The breakup will negate some of the important benefits of the internal European market and will cause widespread economic troubles around the whole world.
Second, killing the euro will go against your own obligations. When you founded the eurozone you also agreed that any amendment of the rules of the EMU will go through an amendment of the Treaties. That means that countries such as France and Belgium must explicitly agree to the eurozone breakup, and I sincerely doubt that they would. So in case you want to print Deutsche Marks again, you will have to infringe the Treaties in a very blatant way.
If the internal political pressure is really high you might probably risk and do it. But going against the founding principles of the European Union will have a very high price for you. One of the reasons for the unification back in 1990 was that you were securely integrated in the European Community. Yes, you are very different now and yes, you are rightly demanding a stronger voice in the world affairs. But still – there are ambiguous feelings in Europe about a strong and expansionistic German economy, especially if combined with a rapprochement with Russia. You need to think carefully about those considerations.
Whatever you decide to do, I would strongly advise talking sincerely with your own people. Cheap propaganda about the lazy Greeks may sell the newspapers, but we’re not talking about entertainment here. Your choices will define the future of all European citizens, and that means Germans as well. The European Union will never be the same after the breakup of the eurozone, and you will not enjoy the position that you have now.
Please think carefully before making your decision. The world will not end with the euro, but it will be an uglier place.
Posted in Budget and Finance, EU Reform, Institutional Affairs
Tagged bonds, break-up, debt, Euro, European Union, eurozone, Financial Crisis, Financial Markets, Germany
The European Commission has published in the recent days two communications that touch on important aspects of the sustainable economic development of the EU.
The first is a communication on renewable energy and the progress towards the 2020 targets. The communication presents an overview of the renewable energy industry in Europe, its prospects to 2020 and addresses the outstanding challenges for the development of the sector. The Commission points out that renewable energy constituting 62% of 2009 energy generation investments in the EU. Member States projections show that renewable energy will grow at a faster pace in the years up to 2020 than in the past. Combined Member States expect to more than double their total renewable energy consumption from 103 Mtoe in 2005 to 217 Mtoe in 2020. If all the production forecasts are fulfilled, the overall share of renewable energy in the EU will exceed the 20% target in 2020. The Commission suggests that whilst annual capital investment in renewable energy today averages €35bn, this would need to rapidly double to €70bn to ensure the EU achieves its goals.
The second is a communication on the commodity markets and raw materials. This communication was delayed due to the French request to include measures to improve the transparency of financial and commodity markets. The document makes an overview of developments on physical markets of oil, gas, electricity, agricultural commodities and raw materials. The Commission outlines the growing interdependency of financial and commodity markets and then outlines policy measures for the separate physical markets. The communication then outlines the Raw Materials Initiative and describes the 14 critical raw materials – those who have a particularly high risk of supply shortage and are particularly important for the value chain.
Posted in Agriculture and Fisheries, Budget and Finance, Energy, Enterprise, Environment, Foreign and Security Policy, Internal Market, Telecommunications, Transport
Tagged commodity markets, critical raw materials, Europe 2020, Financial Markets, renewable energy, strategy, sustainable development, targets
A graphic tool by the Financial Times explains the existing framework and proposed changes to financial regulation in the EU, US and UK.
To my best knowledge, the UK is still an EU Member State. However, it is not part of the eurozone and London is the biggest financial centre in Europe. That explains the separate heading.
Euractiv reports that representatives of Europe’s major banks and financial industry players have issued a joint appeal, calling for progress on supporting transnational financial groups in the event of crisis.
This call is quite well scheduled, since at least one source is saying that the banking crisis in Europe will be much worse than in the United States.
Rather surprisingly, the G 20 Summit in London has succeeded in delivering palpable results.
• an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy;
• a call for strengthened financial regulation and supervision;
• establishment of a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission;
• taking action against non-cooperative jurisdictions, including tax havens;
• extending regulatory oversight and registration to all systemically important financial institutions, instruments and markets, as well as systemically important hedge funds, and Credit Rating Agencies.
This is an impressive list. It remains to be seen what will be accomplished.
In its communication to the European Council summit on 19-20 March, the European Commission sets out proposals for coordinated European action to fight the economic crisis.
Regarding the financial system, the Commission endorses – and asks EU leaders to endorse – the key principles set out by the de Larosière Group.
In terms of the support for the real economy, an annexe summarises 500 national measures and concludes that they are broadly in line with the principles that recovery action should be timely, targeted and temporary. The Commission calls on EU leaders to endorse clear principles for further action, in line with the single market, with open trade worldwide, with building a low carbon economy and with returning to sustainable public finances as soon as possible.
According to the EC The EU should make a united push to improve the global financial and regulatory system, focusing on:
• better transparency and accountability;
• appropriate regulation of all financial actors;
• tackling difficulties caused by uncooperative jurisdictions;
• boosting international supervisory cooperation;
• and reforming the IMF, Financial Stability Forum and World Bank.