A European growth spurt. Can anyone take seriously the comments by some economists on developments with the single currency? I seriously doubt it. A week ago, a number of so-called 'weak' members of the eurozone were due to roll over their debt on the markets and the supposed experts were busy announcing that this would be tricky, very expensive and disaster was looming (I didn't invest this word - it comes straight from the economic experts themselves). Things did not work out like that at all - quite the opposite, as we reported in this newsletter. Some of the commentators reacted caustically, arguing that none of the countries seeking finance had faced a lack of buyers and all were therefore able to borrow money at lower-than-expected interest rates. French newspaper Le Monde (the most-quoted international newspaper in the French-speaking world) commented: 'The markets are neurotic and suffer from regular panic attacks. They believe any old rumour and clutch at the prophecies of Dr Strangelove and currency undertakers who frequently announce the imminent death of the euro.'
And they continue to do so. In good faith perhaps, or in order to pursue special interests, they use learned economic wizardry to explain that the euro is going to disappear, leaving one with the choice of either the euro being abandoned by the weakest Member States or Germany going back to the Deutschmark. In truth, however, Eurogroup is busy making a radical overhaul of its response mechanisms for fending off attacks. There is no need to worry about the fact that the negotiations in Euroland did not reach a conclusion this week (the week ending on Friday 21st) because both the chair of Eurogroup, Jean-Claude Juncker, and Commissioner Olli Rehn have talked about the likelihood of agreement being reached next month. In parallel, Michel Barnier is preparing tougher bank stress tests and the presidency of the Council has announced that it will be pursuing an ambitious fiscal harmonisation programme covering both savings tax and taxes in the financial industry. The Commission has announced that it will be unveiling a harmonised company tax basis, something that has long been called for. At the same time, the German Chancellor has announced plans to ensure progress in European economic coordination in several domains. And how could one ignore the fact that both China and Japan have been buying up treasury bonds issued in euros by the least stable eurozone countries? The eurozone is a vast, complex body that is not even scratched by the artificial doubts fostered by a handful of economists who recently talked about the collapse of the eurozone and are pathetically at pains to try and prove themselves right. I am sure that developments like China's support for the euro and Germany's growing support for European economic governance mark a significant shift and this moment in the negotiations within the eurozone (with support from the outside from the United Kingdom, which is sometimes reticent but London has decided to remain at the heart of other aspects of Europe, like military issues and EU affairs) will be looked back on by historians of the future as a European growth spurt.
True limits to the Hungarian Presidency. I will conclude my weekly survey with a comment on the Hungarian problem and the importance of taking a balanced view of a range of current events. The EU's relations with Africa came up this week (with the call for developments in African countries to be given consideration without neglecting historic and sentimental ties), the EU's attitude to the new Tunisia (avoiding automatic condemnation of progress thus far) and developments in economic governance. Against this global backdrop, it is important to step back and take a level-headed look at the Hungarian Presidency of the Council of the EU. The Hungarians voted in a right-wing government by a landslide. That is a stubborn fact and if the timetable had not happened to give Hungary the presidency of the EU right now, then Viktor Orban would have taken his country down a eurosceptic, nationalist road. His role, however, at the helm of the EU has sparked reaction from the European Parliament and will force him to change the new Hungarian law on freedom of the press and announce an interesting work programme for the EU. Not to mention that the head of state' role has been cut back at EU level because the Summit has a permanent leader, as does the eurozone and as does foreign policy; and the various Council of Ministers' formations are chaired by the relevant minister. The prime minister won't be seen much in Brussels. Orban's controversial plans for the millions of Hungarians who have the passport of neighbouring countries as a result of international decisions taken nearly a century ago(for what seemed like good reasons back then but which now look rather unfair) - that is certainly a big problem but it is not actually connected with Hungary's six-months at the helm of Europe.
(F.R. trans fl)