Before commenting on the results from the Ecofin Council and Eurogroup (a report on which is included in the following pages), here are a few comments about recent monetary and other events.
Weak or strong euro? What counts is complaining about it. When the euro is strong, the general rule is to say that it should be weak. If the euro is weak, affirmations abound stating that it should be propped up. What counts is to complain and speak ill of it as much as possible. A few months ago all we could hear were complaints about the excessive strength of the euro in comparison to the dollar, which made European exports difficult and led to EU inhabitants travelling en masse to New York (or to London, outside the eurozone) to do their shopping. Shortly afterwards, lamentations were again stirred up but this time in the opposite direction: the euro was losing value, oil and gas supplies (valued in dollars) were becoming more expensive, the single European currency was (and I am not exaggerating) on the edge of bankruptcy. The authors of these complete reversals in opinion were, for the mostpart, the same and their objective was to create a bad image of the euro. Even the president of the European Central Bank took part (cautiously) in the twofold lamentation, from the opposite position!
The truth is that fluctuations affecting the euro are not dramatic at all if they remain within acceptable limits that can be controlled. Oil, gas and other raw materials cost more in the EU if the euro is weak; European exports become more difficult if the euro is strong. Dramatising things is, obviously, a more spectacular occupation and it's just too bad if it helps create speculation.
An undeniable link. The close link between weaknesses in financial regulation and monetary speculation has been underlined on several occasions in this column. Obviously, this is not just a personal opinion. One editorial explained much better than I could on the theme of “rules delayed, bankers begin again” and reached a categorical conclusion - “Promises were made to eradicate the banking system operating in the shadows but this very system is now jumping for joy. The derivatives market has never been tamed. The rating agencies are still making disturbing decisions. The system is once again resuming its bad habits of old. It will be necessary to decide one day to put a stop to all this”.
Are the rating agencies independent? Pervenche Berès, the president of the employment/social affairs committee at the European Parliament (after having presided over the economic affairs committee for a long time), declared: “The reputation of these agencies is likely to be tainted by the Greek episode, as is the reputation of the Greek authorities themselves. Their contribution to speculation, which affected Greek debt and subsequently, the euro, means that an alternative mechanism for rating national debt is required, which is controlled by the public sphere. I suggested the idea of an independent 'Court of Auditors', which could exercise these functions. The current situation once again lights the way for this proposal”.
US is not shutting the door. Yesterday, this column attempted to examine the situation involving the Swift dossier after the draft agreement between the EU and the US on this subject was rejected by the European Parliament, underlining that the current uncertainties are essentially linked to Washington's position. The US ambassador to the EU, William Kennard, expressed his disappointment at this reversal in anti-terrorist cooperation with the EU but, overall, appeared to be both moderate and optimistic in the interview he gave to the newspaper, Le Monde. He underlined that his country's efforts were not intended to protect Americans alone but also Europeans and everyone else in the world. The objective is to enable the US Treasury to have access to data about financial transfers made by people “suspected of anti-terrorist activities”. In his opinion, it is mistaken to believe that Americans are not concerned with protecting private life. He stated that the level of protection ensured is unprecedented and that they hoped that European political leaders, particularly at the Parliament, would take the time to analyse how this programme worked, as well as the guarantees that it provided. Mr Kennard also highlighted the need for reciprocity of data exchanges and affirmed that the position taken by the Parliament was due, above all, to the acuteness of the institutional debate between Parliament on one side, and the Commission and the Council on the other. The ambassador did, however, admit that the draft agreement was not perfect and that it was only a temporary arrangement with the Council and the Commission, because they were aware that MEPs played a role in the negotiating process for a definitive agreement.
In the context of repercussions on Euro-American relations in general, Mr Kennard proved reassuring and asserted that they would not be making any simplistic or dramatic conclusions with regard to one specific case. He said that the priorities of President Obama and those of Europe are identical and that it was important that they continued to work together. (F.R./transl.fl)