20 - 26 January, 2013
EU gets tough onfiscal discipline
Time to face the economic crisis
Thereisnodoubtthatintimesofeconomic recessionstatebudgetsbecomethemostcru- cialtoolforeconomicpolicy.Wetotallyagree withECPresidentRomanoProdithattheStabilityPactforfiscaldisciplineinmember statesisnow"stupid."Thereisatimefor everythingsaystherelevantproverb,butnowisnotthetimeforfiscaldiscipline.Onthe contrary,the15EUeconomiesneedmoreinflationandmorepublicdeficits;unlesstheUSfindsasolutionforeverybodyandsuppliesthedevelopedworldwith,sayforexample, cheapenergy,intheformoflowpriceoilfromthePersianGulf. Asthedevelopedworldenteredthedeepdarktunneloftheeconomicslowdown,atransfor- mationintoaclassiccrisisofdisinflationand anavalancheofbankruptcieswillemerge. JustthinkaboutwhatJohnMaynardKeynes wouldhavesaidhadhebeenamongusabout waystorevivetheeconomyoftheentirewest- ernworld:startdiggingholesontheground andthenfillthemwithgovernmentmoney.Spendinggovernmentmoneyforinfrastruc-tureisatime-cherishedpractice,givingthe economyawayoutfromarecession.Unless, aswementionedabove,theAmericansman- agetosupplythewesternworldwithcheap energyandhelpitbecomethevehicleforthe nextresumptionofeconomicactivities.TheAmericanshavealreadystaredspending governmentmoneytohelptheeconomyandtheirlastpackageoftaxcutstodividendson shareswillcostUSD300billion.Conversely,theEUstilllooksatwaystoreducegovern- mentbudgetdeficitswhenitshoulddothe opposite:increasestatespending.Beware...thecosttorevivetheeconomywillbemuch greaterandprobablyunbearableifthereces- sion worsens. Better act now when the destructionoftheexistingbusinessenviron- menthasonlystarted.
Ukraine's Yanukovychsteps up tothe plate
Afteralonglineofprimemin-isters,ViktorYanukovychisconfidenthisnewgovernment willmakeadifference.The52- year-oldpremierreiteratedhiscommitmentthatUkraineplanstocarryoutreformsandconsecutivelyfollowthewayof integrationwiththeEU.Yanukovychexpressedenthu-siasmoverthecurrentfa- vourablepoliticalatmospherebetweenUkraine'sparliamentandthegovernment,sayingit wouldacceleratetheimple-mentationofreformsandhelpovercomeexistingproblems."ForthefirsttimeinUkrainianhistoryabasisofthemecha-nismofrealinteractionbetweenlegislativeandexecu-tiveauthorities'branchesas wellasofresponsibilityfordevelopmentsinthecountryhasbeenfounded,"Yanu-kovychtoldNewEurope."Thisgivesmeaconfidencethatthisgovernmentwillbeabletospeedupessentiallythepaceof economicreformsinUkraineandthattheirpositiveresults willbecometangibleforeverycitizenofourcountry."
Solbeshasabone topickwithGer- many'sEichel(R)
Commissioner Solbes slams Germany, France and Italy on finances
“The good news is, we‘ve found Shergar...” |
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Ten years ago, the EU was preparing to get toughon fiscal discipline, with Commissioner Solbes lec-turing Germany on its excessive budget deficit andalso pointing a fiscal finger at France and Italy.Romano Prodi felt felt compelled to call the existingstability pact‘stupid.’New Europe did call for an increase in state spendingto help the economy, but the measures that were ta-ken a decade ago were... well lets not rub too muchsalt into the wound.Then Ukranian PM, Viktor Yanukovych was promisingreform and looking towards joining the EU, but today,he is President, with his opponent in jail on chargesmany feel are politically motivated charges. EU mem- bership is further away now than 10 years ago.
n e 1 0 Y e A R S A GO
David Cameron’s Euro adventure continues. His much-anticipatedspeech on Europe; that is, his outlining of the future relationship he wants between the EU and the United Kingdom, has been postponedonce again. The first time, scheduled for 22 January, was for diplomaticpurposes, clashing, as it did, with the anniversary of the Elysée Treaty that founded the European Coal and Steel Community (two power-ful founding members of European integration, France and Germany, would not be happy with a critical speech on their particular day of ce-lebration), while the second time, rescheduling the postponed date of 18 January, had to be put off as the prime minister needed to deal withthe escalating hostage crisis in Algeria; in the context, the right decision.Deferrals, however, do not deflect from the fact that Cameron still hasa speech to deliver. So far, he has received much criticism from oppon-ents, both on the right and left of the political spectrum, both pro- andanti-Europe. Cameron’s speech, long-promised and long-awaited by his European counterparts, will outline the UK government’s attitudeto the EU; namely giving its support, yet asking for a certain repatri-ation of powers from Brussels to London, mostly around social andemployment legislation.The contents of the speech, not entirely a secret, but not explicitly known, have already earned Cameron broadsides from various EU andglobal leaders, notably the US President, Barack Obama, who, echoingthe sentiments from a senior state department official. insisted thata strong Britain is needed within a strong European Union; both aredesirable from the point of view of the current American administra-tion, which is due to open negotiations in the first half of this year ona free trade agreement. Potential economic disruption is the last thingthey need.Europe, too, is none too happy with Cameron. Those who demand areferendum on UK membership, that is a straight in-out vote, (whichthe prime minister is doing all he can to avoid committing to), deplorehis weakness; those who feel he threatens the existence of the Uniondeplore his treachery.Cameron, as borne out by leaked extracts from his speech, remainssomewhere in between; a pro-European, who wants some form of re-form, a reclamation of powers he can take back to the British publicas evidence of his tough stance towards the European Union. Duringthe plenary session in Strasbourg, MEPs were lining up to condemnCameron’s supposed perfidy, with Liberal MEP, Graham Watson, even been pulled-up by his part, the pro-EU, junior coalition partners, Libe-ral Democrats, for a tweet he sent on the subject. Elsewhere, friendly governments like Ireland and the Netherlands (where the prime mini-ster was due to deliver his speech) both took the EU line: no regenera-tion of current EU treaties is acceptable.It is true Cameron is playing a dangerous tactical game; offering a re-ferendum not on EU membership, but on the new kind of relation-ship he hopes to achieve following discussions with other EU govern-ments. That is, assuming he is re-elected in 2015 (he has promisedthe referendum in 2018, during the second half of his term of office).If the country reject the offer, there is no certainty of what that mightmean – a second referendum on membership, or a return to the cur-rent arrangement?Cameron is facing severe pressure from various factions, such as Ukipand the newly-formed We Demand A Referendum Party, aiming toforce an in-out vote, not to mention the growing Eurosceptics in hisown Conservative Party, while simultaneously trying to reassure otherEU governments that he is essentially on their side.European Parliament President Martin Schulz, for one, has warnedagainst the prime minister using Europe as a front in an internecineparty battle. He may very well have a point; trying to be all things to allpeople in the long run often leaves you with no real friends at all.
‘A friend to all is afriend to none’