Euro crisis: A Straight-Jacket to Impose Austerity on European Peoples

Olli Rehn, European Commissioner for Economic and Monetary Policy, recently held a joint press conference with President José Manuel Durão Barroso on Reinforced economic policy cooperation in Europe where he again flagged their desire to have more input into National budgets:

The Lisbon Treaty provides plenty of room for progress through a better and full use of the existing economic policy instruments, and through revised and new secondary legislation, where needed. In particular, article 136 on economic policy coordination enables us to develop new tools for reinforced economic governance in euro area.

Today’s communication is built on three blocks:

First, we must reinforce both the preventive and the corrective arms of the SGP. The Pact is a solid set of rules, but it has suffered from a chronic failure to comply with rules and principles.

The essential cornerstone of reinforced economic governance is to coordinate fiscal policy in advance, in order to ensure that national budgets are consistent with the European dimension, so that they don’t put at risk the stability of the other member states. This can be done in the framework of a European economic semester.

He had raised this theme in an interview with EUBusiness:

The preliminary monitoring would not mean a thorough point-by-point review of national finances, but the European Commission would aim to evaluate member states’ budgets and provide recommendations as needed.

An article in L’Humanité commented:

By demanding the right to veto its member countries’ budgets, the European Commission challenges the peoples’ sovereignty and appears set to take a new step towards the authoritarian and ruinous super-austerity policy demanded by Angela Merkel and supported by Nicolas Sarkozy

A few days before L’Humanité also had this to say:

History has proven correct those who denounced the Single European Act in 1986, who voted “no” to the Maastricht Treaty in 1992, and rejected the Giscard constitution in 2005. But the makers of the crisis obstructed the debate in progress, wishing to fix the destiny of Europe in isolation from the people, and today wish to deprive the parliaments of the right to vote freely their own national budgets. This liberal and authoritarian haste is pushing Europe toward a catastrophe. We must reopen the citizen debate, to provide proof that a different European construction is possible.

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  • Mack

    Interesting, is that view popular in France or is it limited to the (farish) left?

    The Euro is forcing austerity on the PIIGS, but not the French, Germans, Dutch etc, despite cut-backs elsewhere they’re being asked to foot the bill.

    What is alternative construct they favour? Presumably less centralisation of power, which would render the Euro unworkable.

  • joeCanuck

    Headline wrong. Not imposing austerity, just imposing a dose of reality. You cannot go on spending more than you earn. You will hit a financial wall eventually. I’m not going to loan money to someone whom I think will not pay it back.

  • Mack

    I think that’s the headline from L’Humante (one-time (still?) French Communist Party newspaper)

  • Mark McGregor

    Joe, the only thing wrong with the headline is I forgot to use quotation marks.

  • joeCanuck

    Fair. They don’t know how to spell either; no hyphen in straightjacket or the more common spelling, straitjacket.

  • Mark McGregor

    Joe – Its a bit better than any translation I could manage.

    Mack – no longer formally linked with PCF but very close to them.

  • I fail to see why any of this is Germany’s problem. The euro is no different in principle from the gold standard. If countries can’t manage their own budgets then let them either default or devalue by quitting the euro. If you want the benefits of a fixed exchange rate, you have to face up to the attendant responsibilities. If you can’t, then why should other countries bail you out? Merkel should have called Sarkozy’s bluff when he threatened to take France out of the euro.

  • joeCanuck

    Merkel thinks it’s a potential problem for Germany. Mind you, if I was a German worker I’d be mightily pissed off at Greece with its profligacy and totally out of tune with their retirement age to quote but one example.

  • May as well rename it the deutschmark and be done with it.

    All participants were never equal in this (terminal?) project and as such the euro was partly sold on the basis of continuing the gravy-train to the minor countries. If Germany doesn’t help the mediterranean the political benefits collapse and with it likely the euro itself.

  • divide and rule

    In other words, if you were a German worker you’d be pissed at fellow workers while wealthy Greeks pay less taxes than wealthy Germans. It’s a good thing you’re not a German worker because your priorities would be off. Hopefully you’re not a worker at all.

    Something else: states can keep spending more than they earn indefinitely if their income keeps rising fast enough.