Naked capitalism
February 10, 2010
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| Herman Van Rompuy, the EU’s new president. | |
On the one hand, as we noted in an earlier post, EU president Herman Van Rompuy has made no bones about his view that the EU needs to have more clout in economic affairs. Per the Telegraph:
Herman Van Rompuy, the EU’s new president, has submitted a text calling for the creation of an “economic government” that shifts responsibility for economic planning from national authorities to the “EU level”
But the Independent has a story up, “EU President’s secret bid for economic power,” that makes this effort sound more like a land grab:
The new President of the European Council, Herman Van Rompuy, is using the financial crisis sweeping the eurozone to launch an audacious grab for power over national budgets, leaked documents reveal.
The Independent has seen a secret annexe to the letter being sent by Mr Van Rompuy to European Union heads of government inviting them to the summit to be held tomorrow in Brussels. In an early and muscular assertion of authority over national governments and over the EU Commission, the Van Rompuy note states: “Members of the European Council are responsible for the economic strategy in their government. They should do the same at EU level. Whether it is called co-ordination of policies or economic government, only the European Council is capable of delivering and sustaining a common European strategy for more growth and more jobs.”
Mr Van Rompuy states that “the crisis has revealed our weaknesses”, adding: “Budgetary plans, structural reform programmes and climate change reporting should be presented simultaneously to the Commission [his italics]. This will provide a comprehensive overview.”
[efoods]How one reads this could easily devolve into those “one man’s terrorist is another man’s freedom fighter” debates. On the one hand, the pragmatists assert that there is a great deal to be gained by having the EU become more cohesive and successful, and national sovereignity will inevitably have to be compromised. On the other, this very move has been deferred as long as humanely possible precisely because it was politically unpalatable. Now to have it take place, with the first act in some member states being an austerity regime….this is not a great way to make the medicine go down. And recall the after-effect of IMF austerity regimes in Asia after its 1997 crisis. It wasn’t just the “client” states that resolved never never to have anything to do with the IMF, but even mere bystanders like China came to the same conclusion, that it was necessary to build up big foreign exchange reserved to avoid what befell Indonesia and Thailand. Admittedly, an austerity regime for Greece (and the other members of “Club Med”) may not be as draconian, but Greece is also in much closer proximity to countries that will not be put on a short leash, which could stir even more resentment.
And of course, the fact that this story was leaked, with the hope of making waves, also says there will be a great deal of tough discussion and (hopefully) compromise before any deal can be reached.
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