In a long line of EU summits with global counterparts, there is an EU-Japan summit on 4 May. As is customary, the European Council is represented by the presidency country which of course is the Czech Republic. And as is customary, the PM would lead the Presidency delegation. Except of course that the Czech Republic only has a caretaker interim prime minister (before an interim PM who will be economist and statistics office chief Jan Fischer takes office). So Czech President Vaclav Klaus has exercised his prerogative and will represent the Council himself.  For a man who we’re constantly assured has no real power, he gets around. Klaus has been revelling in the circumstances, pushing the “global cooling” meme and extracting every last drop of suspense from the still unratified Lisbon treaty.  One irony is that the meeting with Japan will occur in the context of a Kyoto Treaty — the bete noire of the global coolists — windfall for the Czech Rep., as it sells hundreds of millions of euro of carbon credits to Japan. Nice to have during a global financial crisis.
Author Archives: P O Neill
Down the Republic
Paul Krugman turns his attention to Ireland in Monday’s NYT column. Of course we’re flattered by the attention. But there’s an important point. The casual reader of the column could come away with the following narrative about the Irish crisis: lightly regulated banks made bad property loans. The government was mostly an innocent bystander, except for the tax revenue that came in from the property boom. Now the boom is a bust and those meanies in the ratings agencies are making the government pursue contractionary economic policies to maintain Ireland’s creditworthiness. And the USA could be like this in a few years.  It’s a tempting story but one which omits a critical ingredient: crony capitalism, Irish style.
VIPs have data too
For years there have been concerns about the voracious appetite for personal data on citizens created by governments and the private sector, and facilitated by technology. If one thing might be changing, it’s a series of incidents where politicians get to experience for themselves what happens when personal data works its way into the public domain. Does UK Home Secretary Jacqui Smith have an increased awareness of privacy issues with her husband’s PPV purchases being tabloid fodder? And now the jinxed Czech Presidency of the European Union council uses a Saturday press release to confirm a story from Finland that passport and schedule details for the EU delegations at the EU-US summit were left on a computer at a Prague hotel.  The press release implies that a person deemed to be responsible has been disciplined in some way, but this just shows that for all the talk about safeguards and firewalls, this type of data is ultimately handled by fallible people, even if well-intentioned.  Hopefully, incidents like this move data privacy issues higher on the political agenda.
The ECB schism
You might think that enough has already been written about dealing with deflation and unconventional monetary policy tools. But apparently not enough to settle the question of whether the European Central Bank should in fact further cut interest rates and shift to quantitative easing i.e. outright purchases of debt. This Bloomberg story puts names on who is arguing for what, with an extended Hellenic phalanx (George Provopoulos, Athanasios Orphanides and Lucas Papademos) pushing for quantitative easing but the Bundesbank’s Axel Weber arguing that the ECB is already near its limits on any type of loosening.
One mess at a time
A salient fact about the US Navy anti-piracy operations in the Gulf of Aden, one of which ended the Richard Phillips hostage situation today, is that they are run from US Fifth Fleet HQ in Bahrain. The base there is essentially a successor to a British base and it’s clearly a, shall we say, interesting part of the world in which it’s reasonable to expect that you’d need to have some naval firepower around. But it does add to the distances in terms of projecting power into the eastern Arabian sea — the French base in Djibouti makes a lot more sense in that regard. But perhaps a bigger concern for the Americans would be any domestic political instability in Bahrain in which their presence or ease of operation in the country might become an issue.
The Helvetic Tiger
There’s a country in Europe with a large financial sector, big exposure to foreign trade, a floating exchange rate, and politics complicated by 4 communities within its governing structure. But enough about the United Kingdom. The latest statistical release from Eurostat covering GDP up to Q4 2008 is fascinating, not least because they also include the EFTA non-EU members, meaning Iceland, Switzerland, and Norway. A few things stand out.
IMF recommended euroisation to eastern Europe
That’s the apparent scoop in Monday’s Financial Times, reflecting sight of a document that apparently circulated among senior policymakers in the last month as the debate about the appropriate multilateral vehicle for sovereign bailouts intensified. The logic is simple:
They need a second opinion
Statement from the meeting of EU finance ministers and central bank governors (ECOFIN) in Prague —
The Ministers and Governors singled out the excessive focus on the supervision of individual financial market institutions and the related neglect of systemic risks as shortcomings of the current system.
Does anyone think that individual regulated institutions were suffering from excessive regulatory focus in the last 10 years?  If so, which one? RBS, Hypo, Fortis, SocGen? Inquiring minds would like to know.
Paging Vaclav Klaus
The response to yesterday’s no-confidence vote in the Czech government, holder of the EU Council Presidency, was a standard “move along folks, nothing to see here”. Normal service would not be interrupted, the remaining 3 months of the Presidency would continue, and the grip-and-grin festival with Barack Obama next week would continue as before.
That was presumably before the lame duck PM Mirek Topolánek’s bizarre speech to the European Parliament today, which is going to go down like a lead balloon in Washington (and probably London too) —
Now we’re into serious money
The Wall Street Journal (subs. req’d) says that Romania will announce that it is receiving a $26 billion aid package, with 2/3 of the money coming from the IMF and the rest from European institutions and the World Bank.