Fundamental question. Europe is moving ahead with determination, and at a much quicker pace than expected, in the definition and implementation of economic and financial management (see this column yesterday). However, the road ahead is still a long one and at some time or other the fundamental question will come to the fore: are all the eurozone countries able to accept the new rules and respect them? This is not about establishing national plans in common; each country can freely choose the political regime it so wishes, with the economic orientations that result from them. Participation in the euro, however, necessarily involves respect for the rules that exist and those being developed, and resorting to a monetary valuation is impossible if the currency is a single one. It is true that, in theory, participation in the euro is obligatory for member states that meet the necessary conditions but this is in fact fictitious. The United Kingdom and Denmark obtained derogations and Sweden is using a legal ruse to remain outside until there is a national referendum that decides otherwise. The truth is that the eurozone will bring together countries that want to be in it and which accept the rules for it.
A survey carried out by the US company Bloomberg among analysts, investors and its customers, indicated that 41% of respondents expected Greece to leave the euro and a certain number thought that Portugal would do likewise. A number of respondents also thought that this could also happen for Ireland and Spain. I believe that no matter what some of the media say, this survey is of no importance whatsoever. It was carried out in the US and the number of answers provided is unrepresentative (less than 1000). Analysts are often more able to explain the past than predict the future. The decisive factors for each country in the eurozone will in fact be their ability to combat tax evasion and corruption, as well as the importance that the public attaches to monetary stability and, therefore, to each countries' capacity to make the necessary efforts to respect the rules.
What should we think about the hypothesis of Germany actually wanting an end to the euro? An adviser to the German government declared: “If a good fairy were to give us the Deutschmark back, it would immediately rise in value by 20% and all the gains that have been made in competitiveness over the last 10 years would vanish in a flash”.
I believe that our starting point should be that all eurozone countries will continue to remain a part of the zone because they want to. The proof, however, of the new rules, is not yet apparent.
Euro exchange rates. Quarrels about the value of the euro are ill founded. The media's preferred attitude is to present any fall in relation to the dollar as a defeat but the services responsible under Mr Trichet and Mr Juncker all rule out any concerns in this regard and consider that the exchange rate around €1.20 (and even a little less) to the dollar is appropriate. It is the US and China that are responding and requesting corrective action when the value of the euro decreases.
The hypothesis of a European Eurozone Council has been rejected. The idea attributed to Nicolas Sarkozy, of having a eurozone summit on an official basis, with its own secretariat, was harshly dismissed by Herman Van Rompuy. Having pointed out that he himself had arranged a meeting between heads of state and government from the zone twice, in March and in May, in a backdrop to the European Council, he added: “I believe that we should remain pragmatic in the way we take action; we do not need new institutions”. For someone who has declared that he does not like taking personal positions, this is quite clear.
Greece will reduce military spending as soon as possible. This column has already discussed the problem of military spending weighing down the budget in Greece. The prime minister underlined that national security is an essential requirement and he mentioned this subject in a meeting with his Turkish counterpart. Efforts will obviously be slow and gradual but the result could prove to be, when the time is right, a significant reduction in the Greek budget, which would help stabilise and reduce the deficit.
The EP on the sidelines? The European Parliament does not intend to be absent at the birth of European economic governance and reaffirmed the demand that the “Community method” be respected and avoid slipping into a purely intergovernmental system. Pervenche Berès said that she hoped that the EP would set up a group of wise men in parallel to Mr Van Rompuy's taskforce; Mr Lamassoure has proposed that the Community dimension of the “Financial Stabilisation Facility” be included in the EU budget. Even as recently as last Thursday, the presidents of the main political groups requested that the EP be involved in the creation of European economic governance and in strengthening the Stability Pact.
(F.R.)