Their fellow finance ministers, though, do not seem to have received it particularly well. Germany, in particular, has been allergic to any notion of Eurobonds that would bring it a step closer to a “transfer union”. If not actual money, the Eurobonds proposal would mean extending part of Germany's hard-won credit-worthiness to all European countries. The French seemed less than enamoured. Only the poor Greeks welcomed it.
So no sooner had Mr Juncker launched his idea than it fizzled. Late last night, when he emerged at the end of the meeting, he did not mention the subject. And when he was asked about his op-ed in the Financial Times, he replied: “It was not part of the agenda. We did not discuss it.” He had written the article to show the idea “is not as stupid as it sounds”.
Plainly his fellow ministers did think it was silly, but he claimed he was not upset. In 2005, noted Mr Juncker, he had proposed a “European semester”, the notion that countries should submit their budget outlines for scrutiny by Brussels well before they are approved by national parliaments. The idea was quashed then, as it was as the beginning of the year when the Greek debt crisis broke out. But in the autumn it was accepted as part of strengthened EU “economic governance”.
“Now it seems that the fathers are numerous,” said Mr Juncker, “The same fate is reserved for the Eurobonds.”
Another defeated idea, this time proposed by the IMF and by the Belgian government, was to increase the size of the euro zone's bail-out funds, worth €750 billion ($1 trillion), to remove any doubt that Portugal and Spain could be helped should the need arise. “For the time being there is no need to increase it,” declared Mr Juncker curtly. Klaus Regling, who runs the €440 billion European Financial Stability Facility (EFSF), the biggest part of the bail-out fund, was on hand to explain that the fund was “sufficient” to help Spain if needed. The actual amount that could be lent would be less than the €440 billion, Mr Regling said, but he declined to give a figure.
For now, the finance ministers want to press ahead with completing measures that they have started: toughening up supervision and sanctions for countries that breach the fiscal limits set by the euro zone's stability and growth pact (deficits no bigger than 3% of GDP and accumulated debt no greater than 60% of GDP), changing the treaty to make the bail-out fund permanent and setting up a system to restructure the debt of insolvent countries from 2013 onwards.
The latter proposals have been softened from demands by some Germans that any country seeking a bail-out should renegotiate its debt with creditors. Now debt restructuring would only be considered “case by case”, and in line with current IMF practices.
In the absence of radical measures—be it a demonstrative act of integration like issuing joint Eurobonds, or getting an bigger bazooka for the EFSF, or even forcing over-indebted countries to restructure their debt immediately—the euro zone seems destined to muddle along for now. The euro zone can only hope that the European Central Bank, which is buying up the bonds of troubled countries and is providing liquidity to banks, can defend the euro zone long enough for better days to come.
An unexpected threat has appeared in the form of Eric Cantona, the former football star who has called for French citizens to stage a mass withdrawal of funds from banks today. This, he claimed, would be a much more effective means of protest than marches and strikes. For Mr Juncker, the call is “totally irresponsible”. Olli Rehn, the economics commissioner, claimed to be a fan of Mr Cantona's former club, Manchester United, but said: “Eric Cantona is a better footballer than an economist.” That might seem harsh coming from a former Finnish professional goalkeeper.
Source: http://www.economist.com/
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