Wednesday, February 2, 2011

A New EU Governance Structure?

. Wednesday, February 2, 2011

The FT has abandoned it's "no cutting articles" policy, so I can link to their stuff again. And here's a piece about potential revisions to the EU economic government structure:

France and Germany are close to agreement on important elements of their plan for closer “economic government” in the eurozone, but they expect several weeks of negotiation with other European Union members to flesh out the details, according to high-level sources in Berlin.

The idea – termed a “pact for competitiveness” – amounts to a big concession by Angela Merkel, the German chancellor, to what was originally a French concept to beef up the policy co-ordination of the 17 eurozone members, rather than all 27 members of the EU.

However, Berlin government sources insist that the eventual proposal will have a strong emphasis on growth and competitiveness, as well as budget discipline, giving the plan a bias towards German policy content.

More details at the link. To me, this is how it looks these conversations are going:

Sarkozy: We need more policy coordination.

Merkel: Okay, then you all need to converge on our preferred policies.

Sarkozy: No no no. You don't understand.

Merkel: No, you don't understand. We've got the money. We've got the credibility. We've got outside options. We're not letting you all free ride. Take it or leave it.

Okay, okay, that's a bit of an exaggeration. But it seems clear that Germany is going to require a much stricter version of the Stability and Growth Pact before it agrees to any further integration. The article says that not only will public borrowing be restricted, but also higher retirement ages (sacrebleu!), harmonization of corporate tax rates (mon Dieu!), and other policies affecting competitiveness.

In other words, Germany is demanding the Germanification of Europe. We'll see whether those terms are acceptable.


A New EU Governance Structure?




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