Angela Merkel Says “Maybe” To Common EU Initiative In Support Of Member States

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Sunday is obviously going to be “D Day” or something like it for the European Union. Leaders of all 27-member EU states will meet in Brussels to discuss concerns about growing protectionism and to examine ways to finance an all Europea economic recovery plan. On the table are two big issues:

a) What to do about eurozone member states who find themselves in difficulty.
b) What to do about the problems posed for the whole EU by the mounting problems in Eastern Europe.

On the first topic “our Angela” is clearly shifting from the time when the German Finance Ministry was simply denying “Der Spiegel Reports”, and is now saying that euro zone nations need to show solidarity towards each other in the current crisis, offering her strongest signal yet that Germany is prepared to help weaker members of the bloc. According to Reuters:

“We have shown solidarity and things will stay like that, but this must be on the basis of the commitments that form the foundation of our common currency,” Merkel said, when asked about possible German aid to fellow euro zone members.

Speaking at a news conference with the foreign press in Berlin, she referred directly to Ireland, which faces ballooning deficits, saying: “A country like Ireland .. is in a very different situation from a country that has fewer banks, such as Slovakia.” Germany has made clear it opposes the idea of a joint euro zone bond issue to alleviate financial pressure on fragile states in the bloc. But a consensus seems to be forming around some other form of aid, with strict conditions attached that would compel recipient countries to consolidate their budgets in line with the goals set out in the EU’s Stability and Growth pact.

On the second issue Merkel put out a call, which I wholeheartedly endorse, for East European states to be absolutely honest, and get all their economic bad news up and on the table, once and for all.

German Chancellor Angela Merkel said she expects an “honest report” on the economic status of eastern European Union members at a summit on March 1. “We need to remain attentive over the problems of the member states in eastern Europe,” Merkel told reporters in Berlin today. “Yet for that we need them to speak openly about their problems.” “We expect them to speak clearly at the summit this weekend,” Merkel said. “Although there are marked differences in the situation of those members we know that foreign banks are withdrawing capital.”

Decisions need to be taken on Sunday, important decisions. The time for procrastination is over.

Postscript

I have put forward extensive arguments on both these issues in my recent posts:

Let The East Into The Eurozone Now!

The EU Bonds Story Rumbles On

This entry was posted in A Fistful Of Euros, Economics and demography by Edward Hugh. Bookmark the permalink.

About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

2 thoughts on “Angela Merkel Says “Maybe” To Common EU Initiative In Support Of Member States”

  1. Pingback: Financial Meltdown » Italian Business Confidence, Retail Sales Fall as Bond Spreads Rise

  2. …On the second issue Merkel put out a call, which I wholeheartedly endorse, for East European states to be absolutely honest, and get all their economic bad news up and on the table, once and for all…

    It is reasonable to expect the Eastern European states to be absolutely honest. Why even raise this issue? If there is any variance found between what was told and what found to be the case, it is simply mal-administration. There would never be any criminal attempt to deceive the rest of Europe. Simply increase support levels and let’s get on with life.

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