Monthly Archives: June 2005

Visegrad Group Meeting

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Now this is interesting. The prime ministers of the Czech Republic, Hungary, Poland and Slovakia are meeting in Poland to talk about a common response to the constitution and enlargement issues following the rejection by French and Dutch voters of the proposed treaty. Also in attendance will be Ukrainian pm Yulia Tymoshenko. They are expected to issue a declaration of support for Ukraine’s campaign to become an EU member.

Obviously they will not be following Chirac’s advice that the best policy for them would be silence.

Euro Debate Roundup

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EurActiv is an extremely useful source of information and analysis (much better eg that EU Observer or Eupolitix, for example). Today they have an interesting survey of the recent debate about the efficacy of the euro. They also have a link to a recent report which seems interesting.

“The rejection of the Constitution by two of the EU’s founding members – France and the Netherlands – has raised concerns about the long-term future of European Monetary Union. But other comments have also led to some extra market volatility for the single currency. Arguably, French and Dutch voters did, in 48 hours, what the European Central Bank has been trying to do for six months – namely reduce the value of the euro.”

Bolivia Has A New President

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His name is Eduardo Rodriguez Veltze, he has been a judge in the supreme court, and he appears, at this stage at least, as an interim, compromise candidate:

The action came after lawmakers gathered following a day of demonstrations and under a warning by the military of possible intervention if the spreading chaos isn’t quelled.

Congress rapidly accepted the resignation of President Carlos Mesa. Then both the Senate and House leaders rejected the job, automatically giving it to Supreme Court Justice Eduardo Rodriguez Veltze, who had been third in the line for the presidency.

“Bolivia deserves better days,” Rodriguez told lawmakers after swearing in. “I’m convinced that one of my tasks will be to begin an electoral process to renew and continue building a democratic system that is more just.”

Publius Pundit has another good Bolivian blogs roundup. In particular Mabb has a good on the spot account of the tension involved.

Interestingly enough Miguel at Ciao and Eduardo Barrio Flores are arguing that opposition leader Evo Morales should resign too, in order to reduce the dangers of this conflict exploding.

Surplus Bicycles

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I don’t suppose that there is any connection with the recent Chinese appetite for purchasing cars, but apparently China and Vietnam are about to be accused of dumping their unwanted bicycles on Europe:

The European Union is expected to levy next month swingeing anti-dumping tariffs on bicycle imports from China and Vietnam in an attempt to put the brake on cheap imports. European manufacturers claim imports from Vietnam have risen from 150,000 five years ago to 1.5m in 2004, while China exported up to 2m bicycles to the the EU last year, despite a tariff of 30.6 per cent already in place.

T-shirts, pants, slippers, sandles and push-bikes, are these really strategically important industries for the EU?

Hungary: New President & Debt Downgrade

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This week Hungary has a new President. The election of Laszlo Solyom as Hungary’s new President was a major setback for the governing Socialist Party (MSZP), at the same time as it was widely lauded as a victory by the right wing opposition Fidesz party. The outcome was largely the result of the behaviour of the MSZP?s junior coalition partner, the liberal leaning Free Democrats, who abstained. Katalin Szili, the MSZP choice, was regarded by Free Democrats as being far too involved with the MSZP. Only 3 votes separated the two candidates, and this reflects the current balance within the Hungarian parliament between Fidesz and MSZP ? a handful of independents and the Free Democrats in fact have the deciding votes.
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EU Budget: The Plot Thickens

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Perhaps better said, the crisis deepens. Jaques Chirac started things off:

“The time has come for our British friends to understand that they must now make a gesture of solidarity”

and Tony Blair, of course, rose to the bait:

“Britain has been making a gesture, because over the past 10 years, even with the British rebate, we have been making a contribution into Europe two and half times that of France.”

“Without the rebate, it would have been 15 times as much as France. That is our gesture,”

It doesn’t look like there’s too much understanding going on here. Then there’s the nub of the matter.

According to Blair, the reason the rebate exists is because otherwise there would be a ‘quite unfair’ proportion of British contribution and:

“The reason for the unfairness is because the spending of Europe is so geared to the Common Agricultural Policy. My view is that if we want a debate on future financing, one part of that has got to be what Europe needs to spend its money on to prepare Europe for the 21st Century, which is not the same as Europe 30 or 40 years ago.”

I think at this stage it is really hard to say how this will work out at the summit. At this moment in time there seems to be little love lost between the French President and his ‘British friends’. Of course a lot of this could change when they get down to the negotiating table, but at this moment in time it isn’t easy to see how.

Prodi Strikes Back

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I think one of the topics for next years election in Italy is just being decided. Romano Prodi (former President of the EU Commission) has just spoken out against Sinascalco. He is in favour of making cuts. Prodi is quoted as saying that:

“Credit downgrades will follow if there is not quick action in fixing the situation, and I do hope Finance Minister Siniscalco makes some decision……The government lost control of current expenditure. The situation is very serious.”

Prodi is about to become the whipping boy, having to go into an election with the ‘popular’ policy of making widespread spending cuts.

Incidentally,
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Germany: Exports and Inflation Revised Down

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According to NTCResearch:

Inflation in Germany rose less than previously thought in May, the Federal Statistics Office reported on Thursday. Germany’s harmonised index of consumer prices rose 0.2 percent month-on-month and 1.4 percent year on year, compared with initially reported rates of 0.3 percent and 1.5 percent, the Office said. Meanwhile, it was revealed today that Germany?s trade surplus narrowed in April as imports surged. After accounting for expected seasonal factors, the surplus declined from 14.7 billion euros to 12.6 billion. The smaller surplus reflected a 0.4 percent fall in exports and a 3.8 percent jump in imports, the data showed.

The downward drift in inflation needs careful monitoring. I’ve got a deflation alert call out on Germany remember. If Germany goes through the inflation wall, then the proverbial s*** really will hit the fan, since I can’t see the ECB doing non-conventional monetary policy. Come to think of it, maybe that’s what the meeting with Fels was all about.

Czech GDP Growing Nicely

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According to data released today the Czech economy is still growing at a fair clip – by 4.4% year on year. Inflation is low at 1.3% (incredibly low, and his marks already an important difference with the Southern Europe countries). Unemployment is coming down too, although it is still pretty high at 9.4%. Exports to the rest of the EU are the main driving force, there is no mystery here. But *note*, Spain (eg) is consistently loosing competitiveness (due to the inflation differential) as the Czech republic pulls steadily up towards average EU per capita GDP. (Personal note: must follow this more closely).