Advertise On EU-Digest

Annual Advertising Rates

11/20/11

Eurozone crisis: "The size of the solution has to be in proportion to the problem we're solving." - by Robert Schuman

Jean-Claude Juncker, the prime minister of Luxembourg and current president of the Euro-Group, once joked: "We all know what to do, but we don't know how to get re-elected once we have done it." The quip has gained a frightening new relevance ahead of a "great leap forward" to an economic union that can keep the markets at bay. The hardcore eurozone countries, led by Germany, have made it clear that the sovereign debt crisis leaves politicians no room for manoeuvre, however far their poll ratings fall.

The constant refrain from Berlin is that the laggards at the back of the eurozone class need to start doing their homework. In Rome, Madrid and elsewhere, the sums relating to national debt, budget deficits and state spending need to start to add up. The days when governments could go their own sweet way, ignoring treaty agreements and responsible only to their electorates, have gone.

Without a new disciplinary apparatus, designed to keep the "reckless and feckless" on the straight and narrow, and policed by the European commission, there is not a chance that Berlin will compromise its own finances by pooling its debt with beleaguered neighbours. It would far prefer to strike out in a new elite monetary grouping, probably including the Netherlands, Austria and France. And Merkel will not countenance a massive and inflationary intervention by the European Central Bank.

As to Britain , their prime minister will have discovered that, as the European dream of integration via monetary union teeters on the brink of catastrophe and the concerns of the semi-detached (like Britain) are at the top of no one's agenda. The UK's decision not to directly assist bailout funds for Greece and Portugal went down badly; the subsequent exhortations from Downing Street to sort the euro mess out were greeted with exasperation.So Downing Street will be no more than a spectator as the eurozone launches itself, in the context of crisis, into a new era.

Will the eurozone's population ultimately be reconciled to emasculated national parliaments enacting austerity programs that may take their countries back into recession? Barroso has taken to quoting the wisdom of another of the founding fathers of the EU, Jean Monnet: "People are ready to change when they understand there is no alternative."

For more: Eurozone crisis: European Union prepares for the 'great leap forward' | Business | The Observer

No comments: