Brussels, 13/03/2008 (Agence Europe) - In reply to the question of whether eurozone governance could be improved, the president of the Eurogroup obviously answered in the affirmative. Expected progress on common concerns in member states of the zone are not, however, necessarily those we talk about most. Jean-Claude Juncker was speaking at a conference organised on 12 March by the Belgian financial forum and National Bank of Belgium. The debate touched on relations between the monetary and political chapters of Economic and Monetary Union and the consequent pre-eminence of one (the ECB) over the other (the Eurogroup), a relationship that is not devoid of hidden dangers.
The first danger would be not to contradict those that claim that the European Central Bank (ECB) is too preoccupied by inflation. “The independence of the ECB is not a permanent invitation to perpetual autism” but is perfectly founded on the pursuit of its struggle for price stability. “This trade off between price stability and growth and employment policy should not be happening” because we cannot have both things at once, unless the US Federal Reserve is copied, whose explicit mandate is both of these objectives. “Those who claim that such a policy (of the ECB) is anti-social are badly mistaken because the section of the population on modest incomes is the first to suffer from” inflation, which according to Mr Juncker, “is in essence a social policy in the medium and long term”. The second danger is linked to the Lisbon Treaty, which continues the mechanism included in the Maastricht Treaty. “We shouldn't give Europeans the impression that this debate is over”.
Junker asserted that after 10 years of existence, coordination of economic policies “is not a performance I am impressed with but it is not something negligible”. The Eurogroup is the place where eurozone governance is worked out. It is coming into its own right and can claim to have had some success. Ultimately and above all, the eurozone suffers from a “lack of national ownership”. If a summit of heads of state and government in the eurozone could make good this failing, then it would be positive but the expectations of those putting forward the idea has led Mr Juncker to believe that there is “nothing” good in the initiative. On exchange rate policy, some observers claim that the subject is too important to be left to governments, but Juncker explained that “to say that governments must abstain is mistaken”. He provided assurances that the Eurogroup has spent hours discussing the question. The informal status of the body and the confidentiality required makes the Eurogroup appear “less visible than the ECB” in its declarations. However, “dialogue with the ECB works well…and I don't see how it could be improved at a formal level”. Globally, “we need to be able to convince”, and structured macro-economic dialogue with China is in this respect a small example of success for the eurozone's external representation, averred Mr Juncker. Eurozone representation externally is, nonetheless, still “quite weak” because it is too fragmented in the multilateral institutions. Juncker was quite clear that at the IMF, “we are ridiculous”. A single plinth is needed for the eurozone but the “European directors at the IMF detest the idea”. Nevertheless, eurozone member states that just stick to their own constituency, “will lose it because history is going in this direction and governments that want the Eurogroup to be represented at the IMF are increasing”. (A.B.)