Category Archives: European Union

TWO-SPEED EUROPE: WHY THIS IS THE LIKELY WAY FORWARD

Impakter Magazine has just published my latest article on Europe, here it is:
 
TWO-SPEED EUROPE: THE WAY FORWARD?
 

FROM THE “WHITE PAPER” ON THE FUTURE OF EUROPE TO THE EUROPEAN MINI-SUMMIT IN VERSAILLES

President Hollande did not mince his words. “Europe will explode,” he warned, if the idea of a two-speed Europe is not accepted.

He was referring to what is diplomatically called “multi-speed Europe” where core countries go forward with European integration in areas they agree on, leaving dissenters behind – not a particularly new idea, after all, that was how the Eurozone and the Schengen area (dispensing with border controls) were born in the 1990s.

There has been, over the years, considerable debate and pushback against the idea of a multi-speed Europe, seen as going counter to the “core values of the Union”. But, increasingly, it is viewed as the only realistic way to move forward, abandoning the unattainable ideal (for now) of a United States of Europe and moving instead to a practical “Europe à la carte”, where each EU member gets what he wants at his own pace.

What is different this time is Hollande’s insistence that core countries should not be prevented from moving forward by other EU members. He further elaborated this at the “mini-summit” he hosted in the lavish Versailles palace on March 6, with his three guests, German Chancellor Angela Merkel, Prime Minister of Italy Paolo Gentiloni, and Prime Minister of Spain, Mariano Rajoy.

In the Photo: In the Main entrance to the Chateau de Versailles, Grille d’honneur – Photo Credit: Ronaldieya

While the immediate pretext for the Versailles mini-summit was to prepare the celebrations for the 60th anniversary of the Union to be held in Rome on March 25 with all 27 EU members (with the UK already excluded), there were two other things far more notable about this event:

  • the inclusion of two more countries, Italy and Spain, a suggestion that the famous German-French duo that has historically guided the EU was about to expand, and
  • the message that a “multi-speed” Europe had a backing of all four countries that together form the economic lead of the Union.

Expect this last fact to be reflected in the “Rome Declaration” to be adopted by the 27 EU leaders in Rome on 25 March.

So what did Hollande and his three guests say at the Versailles press conference?

Read the rest on Impakter, click here.

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Europe at the Crossroads

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Impakter has just published my latest essay: EUROPE AT THE CROSSROADS. I’ve worked hard to try and figure out where Europe is going, if anywhere… 

Here is the beginning:

 

WHAT IS WRONG WITH THE EUROPEAN UNION?

On 25 March 2017, we will know whether Europe – as a “project” for an increased “union” – plans to go forward, fade away or split up.

That is the date of the much-awaited European Summit to be held in Rome to celebrate (without UK Prime Minister May) the 60 years of the European Union. The celebration could turn into a funeral if the 27 heads of EU member nations cannot agree on a so-called “White Paper”, a.k.a. “the Rome Statement”, that they are meant to adopt as a common declaration on Europe’s future.

Alarm-Europe-Logo PHOTO CREDIT: MARCH FOR EUROPE

What does this White Paper say? If you google it, you won’t find it. At the time of writing, it’s still under wraps in Brussels. All we know for now is that there has been a preliminary “white paper” prepared by the Benelux countries, Belgium, the Netherlands and Luxembourg, part of the original six founding member countries (the other three are France, Germany and Italy). And there was a recent declaration by German Chancellor Merkel at the EU Summit meeting held in Malta that drew attention and irked some EU members. “This would destroy Europe!” thundered the Pole with the nodding support of other Eastern Europeans.

What did Ms. Merkel say that was so provocative? She aired the possibility of a “multi-speed” Europe – the idea is simple enough: those EU members who want it should be allowed to go forward with integration, the others would be left to proceed slower, at their own pace.

IN THE PHOTO: ANGELA MERKEL PHOTO CREDIT: ELZA FIÙZA/AGÊNCIA BRASIL, CC BY 3.0 WIKIMEDIA COMMONS

This is not a particularly new idea, she had already aired it two years ago. And it is an idea dear to the Italians who have been pushing it for some time – most recently asking for a “Schengen union for security” to try and solve the problem of immigrants rushing across the Mediterranean. Leading Italian political scientists are also behind the “federal solution” for Europe –  notably Sergio Fabbrini, Director of the Luiss School of Government and author of multiple books on Europe who has also expounded it in the country’s leading financial paper, il Sole 24 Ore.

Annoyed by the brouhaha from Eastern European members, the French President Hollande who felt a reference to a “multi-speed Europe” should find its way in the March 25 White Paper, told reporters:

Europe isn’t a cash-box, not a self-service restaurant, a Europe where you come and take what you need, where you take your structural funds or get access to the internal market and then show no solidarity at all in return. Europe was built to be stronger together and it’s that rule, that principle, which should be driven home in March.

PHOTO (above): FRANÇOIS HOLLANDE PHOTO CREDIT: FLICKR/JEAN-MARC AYRAULTCC BY 2.0, WIKIMEDIA COMMONS

So we have two contrasting views of the European Project and, implicitly, a two-speed Europe: a “Europe à la carte”, that pleases Eastern Europeans and Scandinavians who only seek economic benefits and balk at political integration; and a “federal Europe”, more forward-looking and congenial to continental Europeans. Also, good news for federalists, the French-German alliance that had been driving Europe so far could turn into a foursome: France, Germany, Italy and Spain. They have already agreed to meet in Versailles on 6 March – holding a preparatory “mini-Summit” of their own; and thus immediately angering Poland that threatens to hold counter mini-summits with either the Visegrad group (Poland, the Czech Republic, Hungary and Slovakia) or the Bucharest nine (Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania, Slovakia and Hungary).

Multi-speed Europe is already a reality…

Meanwhile, the Benelux countries in their “white paper”, while supporting the “Bratislava Declaration and its roadmap” as the way forward, talked about the “subsidiarity” and “proportionality” principles in the usual convoluted EU Treaty language that baffles most European citizens:

“The EU shall only act if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the member states, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action be achieved at Union level. The EU will only do what member states themselves are not able to deliver for their citizens.”

Note the phrase “by reason of the scale or effects of the proposed action”: this is meant to indicate the Union (because it is larger in scale) can do certain tasks better than a member country. The corollary: European integration cannot impinge upon what is best done at national level, that’s where “subsidiarity” stops.

So where does this leave the “European Project”? Do we go for more “union” or less? Is “more union” politically viable?

THE ROOTS OF EUROSKEPTICISM

The basic problem is rising “euroskepticism”, a new term coined to indicate that Europeans are distrustful of Brussels and European institutions that they see as “power-grabbing” and too distant from them.

Brexit was only the first alarm bell. We now speak of Frexit (for France), Nexit (for the Netherlands), Auxit (for Austria) etc. Trump’s constant denigration of the EU (calling it a “vehicle for Germany”) and his open support of Brexit and other EU-member exits, has further unsettled Europeans.

On 18 February, at the Munich Security Conference, US Vice President Pence sought to reassure Europeans that the US supports NATO and the Minsk II accord for Ukraine, indicating America would stand firmly behind Europe against Russia. Can Europeans trust Pence? A month into the Trump presidency, it is still unclear whether Trump is top dog and therefore his bark matters, or whether he is a tweeting Reality TV star and therefore his cabinet matters. On February 24,  in an interview with Reuters, Trump made a surprising u-turn, declaring himself  “totally in favor” of the EU…but for how long?

It is a fact however that Trump has become a populist icon, deeply resonating with the rising populist movements in Europe, all calling for an exit of the Euro and Europe – from Marine Le Pen in France to Geert Wilders in the Netherlands to Frauke Petry in Germany to Beppe Grillo in Italy. They all liken themselves to Trump.

IN THE PHOTO: BEPPE GRILLO AT THE RALLY OF THE FIVE STAR MOVEMENT IN PIAZZA DANTE IN TRENT, ITALY, FOR THE PARTY’S PRESENTATION OF ITS 2013 ELECTORAL SLATE PHOTO  CREDIT: NICCOLÒ CARANTI

Listen to Grillo, an ex-TV comedy star, now sixty-nine but with a continuing appeal on young Italians:

“I’m a comedian. You have to understand that my brain doesn’t work like a politician’s brain. I think about something, then the next day I say something else. It’s a very beautiful word, populism. I’m proud to be a populist.”

And about Europe, this is what he had to say:

“It is an enormous apparatus, with two parliaments, in Brussels and Strasbourg, to please the French. I am in favor of a different Europe, where each state can adopt its fiscal and monetary system. I want the Eurobond, a 20 percent devalued euro for southern European countries, protecting our products against those arriving from abroad, and a revision of the 3 percent deficit budgetary rule. I no longer feel the spirit of Europe.”

To read the rest, click here: http://impakter.com/europe-at-the-crossroads/

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Death of the Euro: Thinking the Unthinkable

Impakter Magazine just published my latest article, here it is:

BOOK REVIEW “THE EURO: HOW A COMMON CURRENCY THREATENS THE FUTURE OF EUROPE” BY JOSEPH. E. STIGLITZ (PUBLISHED BY W.W. NORTON & CO, AUGUST 16, 2016)

Nobel laureate Joseph Stiglitz’s latest literary effort, a new book about the travails of the Euro and Europe, published in August with the apt title “The Euro: How a Common Currency Threatens the Future of Europe” couldn’t land in the muddy European political waters at a more appropriate time.

The summer of 2016 was a turning point for the so-called “European Project” – Europe’s long-run attempt to build a United States of Europe that began with the 1957 Treaty of Rome setting up the European Economic Community (EEC) with six founding members (Germany, France, Italy, Belgium, the Netherlands and Luxemburg), and continued in 1993, with the Maastricht Treaty, the European Union (EU) with (up to now) 28 member countries.

 

Problems have piled up this summer, relentlessly.

The opening salvo came in June with the UK referendum that unexpectedly led to “Brexit”, the decision to leave the European Union with 17.4 million Brits voting in favor. For the first time since its foundation, the EU is expected not to expand but to contract, down to 27 members – probably by 2019, when UK exit negotiations will be completed.

 

The most recent problem came in October with another referendum, this time in Hungary, calling on the population to disregard EU policies on refugees and reject quota obligation to accommodate asylum seekers. The referendum did not break the 50% threshold and the result was therefore declared illegal, but it did demonstrate that once again, a hefty minority, 3.6 million Hungarians (43% of voters), supported their government’s continuing opposition to Brussels.

 
Against this background, Joseph Stiglitz’s book has special resonance.
 
As he convincingly argues, the Euro was supposed to bring the European project forward but it has done nothing of the kind – if anything, the European Project has suffered setbacks just as much outside as within the countries of the Eurozone, the 19 EU members who use the Euro as a common currency. Incidentally, this is not a minor currency: The 19 European countries together account for roughly 14 percent of world GNP, making it the third largest economy in the world, after the United States (20 percent) and China (18 percent).
 
Do not delude yourself into thinking this is not important for the rest of the world: should the Euro collapse, the shock would shake the whole world.
 
It could even start another Great Depression.

A SLOW DEATH

Stiglitz minces no words in roundly chastising European leaders for “muddling through” a succession of Euro crises, ever since the first Greek debt scandal broke out in 2010. The book is a convincing diagnosis of what went wrong and why successive “bailouts” of Greece (three so far) have failed miserably, leaving the country six years later with an inexorably rising debt and a Gross Domestic Product diminished by a quarter, while the exceptionally high unemployment (a mind-boggling 50% for the young) won’t budge – really as bad as a war. Stiglitz’ detailed description of the Greek case is harrowing. A must read for anyone who hasn’t followed the drama closely.

And he is equally convincing in arguing that Ireland, often promoted (mostly by Germans) as the “poster child” of the success of Europe’s monetary and austerity policies is no such thing. EU-imposed austerity measures “helped ensure that Ireland’s unemployment rate remained in double digits for five years, until the beginning of 2015, causing untold suffering for the Irish people and a world of lost opportunities that can never be regained.”

Tough words that apply equally well to the other “crisis countries” of the Eurozone. For example, Portugal, also promoted by the IMF as a “success”, is far from that: The facts are that “the government might be borrowing with more ease, but the Portuguese people never experienced a real recovery.” Indeed, across Europe, excessive reliance on austerity and monetary policy “has resulted in even greater inequality: the big winners are the wealthy, who own stocks and other assets […]; the big losers are the elderly who put their money in government bonds, only to see the interest rates generated virtually disappear.”

 

The reason for such a deplorable state of affairs?  

First, a misplaced belief in what another famous economist, Paul Krugman, calls the “confidence fairy”: the idea that with austerity and a balanced budget, business confidence will be restored, which overlooks the simple fact that when consumer demand is depressed, business has no incentive to invest. In a recession, the confidence fairy, as Krugman says, becomes a zombie.

 

To read the rest, click here

NOTE TO MY READERS: Stiglitz’s advice on how to fix the Euro is truly excellent, and I sincerely hope our political leaders will read this book and act on it. I’ve tried to focus on the policy measures that are really doable among the many ideas Stiglitz presents. Eminently practical, they would take VERY LITTLE EFFORT… if only Germany would stop focusing on stupid austerity policies that are destroying Europe!

Go over to Impakter to read about those policy measures and tell me what you think!

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Europe: Time to Clean Up Your Act!

Seven months ago, I blogged about the ignominious stance of Ms. Merkel’s Germany, weighing down on poor little Greece, stripping it bare so it would repay its debt – in short, dangerously rocking the Euro boat and nearly sinking it. That post was titled: “Shame on You Germany, You are Killing the European Project”.

How times have changed in just seven short months!

Now Europe is facing the twin challenge of Brexit and the refugee crisis.

Student debate held at Speak Up November 2015 (video here)

Brexit – if it actually leads to the UK’s exit from the EU and, for now, the chances that it will are about even – could open the way for other Euro-skeptical countries to leave, particularly East European countries like Poland and Hungary that seem to have forgotten how happy they once were to escape from the Soviet Empire.

The refugee crisis has seen an extraordinary change of heart in Merkel: all of a sudden, she has turned into Europe’s paladin, fighting for a generous, dignified humanitarian stand (in fact, the only one that would do justice to Europe’s values). By contrast, East and Central European countries, in a selfish, amoral and ungenerous fit, led by Hungary and Poland in this case too, are fighting Merkel and closing their borders with razor-thin walls, reminiscent of the infamous Berlin Wall.

This is a continent truly divided: on its western and eastern borders, EU members are hitting hard at the European project, while at the center, particularly in Germany, it has to valiantly grapple with the influx of over a million refugees and economic migrants.

The crisis is not longer at its doors, it’s within. Yet, in spite of the deadly urgency, the EU is still grappling in the dark, EU meeting after EU summit, for a solution.

Paralyzed.

Why? Are all our politicians stupid, don’t they realize that if they do nothing, voters at home will make them pay? Or is it the EU institutional framework that is causing paralysis? That framework was carefully constructed to preserve “sovereignty” so that no country joining the Union would lose one shred of its precious “national identity”.

Result? Political paralysis. Inability to take any decisions. Focus on irrelevant details (like the length of bananas or wrapping mozzarella cheese in paper) rather than keeping an eye on the main road.

Of all the institutional stupidities, the worst offender is the EU presidential system: here, since the Lisbon Treatycame into force in 2009, we have two “presidents” of Europe, one for the EU Council who is full time – first it was the Belgian Herman van Rompuy; now, since December 2014, it is Poland’s Donald Tusk –  and then we have a continuing six-month rolling presidency as each EU member country takes its turn at the helm. The next EU presidency falls to Slovakia.

And Slovakia in its recent elections has taken a turn away from Europe: its parties are dangerously anti-European. If you don’t believe me, read this excellent analysis in the New York Times: Slovakia’s Governing Party Loses Majority as Far Right Makes Gains.

My question is: why do we need a rotating presidency of EU member countries if we have a European President of the Council, a man who presides over the Council that consists of the heads of states or government of EU members as well as the President of the European Commission? Why is this President that comes closest to an individual selected by ALL European citizens (since he is elected by the European Parliament), why is he set aside every six months by whatever country that happens to take over the “EU presidency”?

This is a perfect recipe for political paralysis.

What kind of game are our politicians playing at? Obviously, this is a way to have more juicy positions to fill their pockets as they “rush to Brussels”. But it is at the clear expense of European citizens and tax contributors. Slovakia, once it is sitting in the presidential driving seat next July, can be counted upon to at best do nothing and leave the European machine stalled, and at worst, to promote its own anti-European agenda and force the European machine to backtrack.

Time to put a stop to this game and reform the EU institutions. Unifying Europe is a management matter: countries will need to leave behind  chauvinistic nationalism in order to rise up to the challenges and make decisions. Solutions will never be reached as long as countries cling to their antiquated national identity.

To begin with: cancel the six-month presidency turn-over game.  This is the only way to have a real European Union President. Someone we know who is dedicated to the European project. Someone who will push it forward and not stall it – as Slovakia no doubt will.

It’s only a start, but it would be a good start. Your views?

Update: Turkey is suddenly playing tough on EU demands to help it stem migrant flows – a stiff bargain that reveals how weak the EU really is. “EU Welcomes Bold Turkey Plan to Stop Migrants” is the way Reuters titled it (see here) EU “welcomes”? “Bold Turkey Plan”? In fact, the Turks simply asked for twice the money!

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