This week promises to be another ‘busy’ one. Today the EU finance ministers (Ecofin) are meeting in Luxembourg, to discuss the condition of the common currency after last week’s ‘battering’ in the press and in the financial markets. Also headed for Luxembourg is EU Economics Commissioner Joaquim Almunia. Amongst other items he will have one in particulr which is high on his agenda: a meeting with Italian Ecomy Minister Domenico Siniscalco. Almunia is due to present a report on Italy’s deficit situation to the Commission tomorrow, and will almost certainly recommend the initiation of an excess deficit procedure under the revised terms of the stability and growth pact.
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Monthly Archives: June 2005
Swiss Joining Schengenland
In a referendum, 55 percent of Swiss voters who went to the polls cast their ballots in favor of joining the Schengen agreement. Implementation will last through 2007 (though it will be complete for the 2008 European football championships, co-hosted with Austria), but the path to passport-free travel is clear. Joining the area also gives Swiss authorities to a collective database on wanted and missing persons.
Norway and Iceland are the other two non-EU members of the Schengen agreement. The rest of the old EU-15 are members, except for Ireland and the United Kingdom.
UPDATE: As Edward writes, and I should have mentioned, “It is also interesting to note that the supposedly ‘socially conservative’ Switzerland has become the first European state to give solid legal rights to gay partnerships in a popular vote. This should also put some of the recent EU referendum in some perspective.”
In the absence of plan ‘b’
Many readers have been asking about the mechanics of any hypothetical ‘euro’ break-up, or indeed of what might happen if one country were to leave. Up to now, we have been told this is impossible, but clearly it is possible, and, however remote the possibility may seem (the order of 5% risk is the topical response) institutions in the financial sector cannot be without a plan ‘b’. In this context, this article, I found whilst idly noodling around the net, could be seen as informative. It is written by a software engineer for a magazine called Software Reality. The article’s title: reverse-engineering the euro.
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That Other Issue
The euro. Hamish McRae talks a lot of sense in the Independent today:
“So was the euro a terrible mistake? Will Germany, Italy and France go back to the mark, the lira and the franc? A string of stories have hit the streets hinting that this may be the outcome following the failure of France and the Netherlands to ratify the European constitution.
It is easy to see why there should be such speculation, but the eurozone is not going to collapse in the near future. I may be wrong, but my instinct is that while it will eventually unravel, such an event is almost certainly at least a decade away. That said, the debate matters because what was once a no-go subject is now being talked about, and this changes things.”
Let Battle Be Joined
Well, things are shaping up nicely for a ‘healthy debate of the underlying issues’ on 16/17 June. Chirac and Schr?der have pronounced: the ratification process must continue, Jean-Claude Juncker is warning that failure to reach a budget deal at the summit would “turn the big European difficulties into a big European crisis“, and Peter Mandelson forsees a historic opportunity for Tony Blair. Mandelson is quoted as saying:
“Tony Blair could carry on for another three years now that he has been given a “fresh calling” to resolve Europe’s crisis, his old ally Peter Mandelson claimed last night.
Mr Mandelson said the French and Dutch rejection of the European Union constitution handed Mr Blair another chance to secure his legacy as Prime Minister“.
What does all this mean? Well, according to France’s Le Figaro:
“Si Londres gagne, c’est la victoire de l’Europe lib?rale, ? l’anglo-saxonne, aussi ?largie que possible, un grand march? contr?l? au strict minimum par Bruxelles. Si Berlin l’emporte, c’est la victoire de l’Europe politique, libre-?changiste, mais surtout f?d?rale, avec une d?fense, une diplomatie, et une monnaie commune. Dans l’Europe b?tarde du trait? de Nice, tous les Etats membres n’ont pas encore choisi leur camp. La crise va les obliger ? tomber les masques.”
“”If London wins [the ratification dispute] it is a victory for liberal, Anglo-Saxon Europe, enlarged as much as possible, a giant market, with regulation from Brussels kept to a strict minimum. If It is Berlin that carries the day, it’s victory for the Political vision of Europe, free-trade, but especially federal, with a common defence, diplomacy, and a common money. In the ‘bastard’ Europe born of Nice treaty, all members states have not yet chosen their camp. The crisis will force everyone to take off their masks.”
Of course there is a third party here: the Commission. What Barroso will undoubtedly be working for is a pragmatic, workable compromise.
“Mr Barroso urged the French leader and his colleagues to “turn a crisis into an opportunity” and argued: “It is vital that we use the present moment to forge a new consensus.”
He warned Europe not to indulge in a “blame game” or an “ideological rift” between supporters of free markets and those who believe in government intervention. What was needed, Mr Barroso said, was “an intelligent synthesis between the market and the state, which can help Europe win and not lose in the face of globalisation”.”
People Get Ready
Laura Rozen thinks that the broadcast of a graphic video from the massacre at Srebrenica may mark a tipping point in Serbian public opinion and pave the way for the arrest of Ratko Mladic and his extradition to The Hague.
She quotes an international justice listserv:
B92’s Danijel Bukomirovic, speaking in Dutch on NOS Journaal at 20:00 CET, suggested between the lines the Serbian government had had a hand in the surfacing of the ‘executions tape.’ The dire economic needs of the country make EU accession talks the only option for a better future, but oppositon amongst a majority of the poulation against the ICTY’s demands for the extradition of indicted war criminals stands in the way. A mood swing amongst a public in denial of the Srebrenica massacres would pave the way towards the extradition of Ratko Mladic…
This is part of what’s at stake with EU enlargement, and indirectly with the constitutional treaty.
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Long Sentence Arrived
Following up on the previous post, Khordokovsky was indeed found guilty and sentenced to nine years. Allowing for time already served and possible sentence reduction for good behavior, he could be out in 2009. Well after Russia’s 2008 presidential election which is, presumably, part of the plan.
Khodorkovsky is appealing the verdict, and Yukos is suing various parties for $11.5 billion, alleging expropriation. I wouldn’t put much stock in the success of either venture.
Heeding Henry.
Joschka Fischer, the German foreign minister, may be coming out of the dog house – if only conceptually.
After even the left leaning German daily taz recently began publishing political obituaries for the man who more than anyone represents the political maturing (or not) of the generation of ’68 (following the affair about problematic political guidelines leading to criminal exploitation of German visa policies in Eastern Europe and in light of the looming federal election that will likely lead to a government without a Green party participation), Mr Fischer may have decided that it might be worthwhile to spend his remaining time in office not just by campaigning for a permanent German seat in the UN security council but by heeding Henry Farrell’s advice about the opportunities of a dieing European constitution and going back to his own foreign policy ‘roots’: In May 2000, he used a speech at Berlin’s Humboldt University to sketch out his ideas for ever closer union, “From Confederacy to Federation” (pdf available).
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‘Euro Overvalued’
The euro is apparently overvalued. Actually I happen to agree, but today this opion comes to us from a most surprising person: Luxembourg Prime Minister Jean-Claude Juncker, at this point in time President of the European Union. Now I am surprised by this, since he is neither Economics commisioner, nor spokesperson for the ECB, so I am not clear why it is he feels himself compelled to express an opinion.
Really this just highlights the fact that the institutional labyrinth we have created is such that not even those who administer it have sufficient clarity about who is responsible for what. In theory his press conference was about the forthcoming budget negotiations, but judging by what he said, I’m not clear he got round to reading that memo from Barroso about maintaining a sense of calm.
Luxembourg Prime Minister Jean-Claude Juncker, who holds the European Union presidency, warned on Friday that failure to agree on a new long-term EU budget this month would turn a political problem into a full-blown crisis.
Juncker, who also chairs euro zone finance ministers, said the single currency shared by 12 EU countries had been weakened by the “No” votes to the European constitution in France and the Netherlands but was still overvalued compared to the dollar.
“A failure on the financial perspective (budget) would turn the big European difficulties (after the referendums) into a big European crisis,” he told a news conference.
“As a result of the referendums, the euro is weakened. What helps the economy for the moment could in the long term become a burden,” he said, adding: “I think the euro is overvalued in relation to the dollar.”
He also informed the press that he would resign as PM if, as expected, the Luxembourg referendum voted ‘no’ on July 10. Anybody seen an actual Luxembourg poll recently?
Denmark Poll: ‘No’ Takes Lead
The EU observer is carrying details of a poll conducted in Denmark by Greens Analyseinstitut, and published in the Danish business daily B?rsen today (3 June), 39.5 per cent of Danes would reject the Constitution, 30.8 per cent would now approve the Constitution, while 29.7 per cent were undecided.
Calculating roughly, this means of those who have decided, 56% are against and 44% are in favour. Interestingly 63% want the right to vote. Prime Minister Anders Fogh Rasmussen – the EU Observer says – is reluctant to officially cancel the planned referendum scheduled for 27 September. This is an elemnt I hadn’t bargained on – the people demanding the right to express themselves. This could become a bandwagon which it gets difficult to stop. I guess it is what Barroso meant by ‘contagion’.