Comments 15

Europas Reformchance

Apr 6, 2017 Herman Van Rompuy , Janis A. Emmanouilidis , Fabian Zuleeg

BRÜSSEL – Die Krise in der Eurozone ist inzwischen sehr viel weniger gefährlich als während der schlimmen Jahre 2010-2013. Das Wachstum hat sich in der gesamten Europäischen Union erholt, und zwischen 2014 und 2017 wurden fünf Millionen Arbeitsplätze geschaffen.

Doch die EU-Bankenunion bleibt unvollendet, Griechenland sowie der italienische Bankensektor stehen vor Herausforderungen, und die Nachbeben der Eurokrise könnten noch immer die Stabilität der EU untergraben – oder sogar die gemeinsame Währung bedrohen.

Sofern nicht das Worst-Case-Szenario populistischer Wahlsiege bei den Wahlen in Frankreich im Mai und in Deutschland im September eintritt, sollten die europäischen Regierungen im weiteren Jahresverlauf die Gelegenheit ergreifen und ehrgeizigere, aber pragmatische Reformen verfolgen.

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0 Comments on this paragraph, 32 in all 32 Comments on this article

Mauricio Duran-Loriga Apr 18, 2017

"Insanity: doing the same thing over and over again and expecting different results." - Albert Einstein
ian gribbin Apr 17, 2017

The opening line is a pat on the back! A self congratulatory overtone right from the very get go - oh how these bureaucrats are so out touch.

It's down to growth elsewhere in the world that has helped the shabby, redundant organization you call the EU partially out of its mire.

The elephant in the room is the Euro and fiscal policy of course. Germany and northern states still don't want to take their forty lashes for lending to the periphery after the misread and lies that was currency union.

Determined to self aggrandize, and provide jobs for lawyers and bureaucrats, they blunded headlong into currency union without even a thought about tax harmonization and the very different economies they were melding together.

Because of their greed and desire for prestige, these incompetent people unwittingly undermined the very principals of those that they revere, the initial founders.

Imagine how horrified the original signees of the Treaty of Rome would be seeing how their children had screwed it all up and unleashed mass employment on the EU without any mitigating offsets. For shame Mr Von Rompuy, have you no decency?
Andrew Cole Apr 13, 2017

Franco-German dominance over the EU bureaucracy and policy along with use of that to dump Eurozone risks and liabilities is why the UK has been forced to leave. Either run the Euro properly with transfer payments and catch up write offs to compensate for the stricter controls OR It continues to be a vehicle for German Supremacist dominance by harming other countries. Unfortunately he author has been in the appeasement camp for his tenure in office and done a lot more harm than good as a result.
eusebio manuel Apr 11, 2017

There is a lees European scenario but the surplus Europe wil be done efficiently while we are European and we become stronger
Prashant Kotak Apr 9, 2017

There is zero chance of the EU leaders embarking on reform, because that would require treaty change, and treaty change would require referenda in many countries, and they don't want to open that pandora's box, because they are absolutely terrified lest the insurgent parties in various countries turn any question about reform into a debate about reducing, not increasing the coupling with the EU, or indeed just leaving. So, in typical EU fashion, they will stick their heads in the sand and hope for better times - which will never come.

Countering that, post Brexit, the EU's instinct will be to reach for deeper integration towards single nationhood, because the logic of the Euro demands it; without that the Eurozone faces collapse. The problem, is, this only makes sense for Germany, France and the Benelux countries. Perhaps Spain as well but probably not Italy or Greece. It doesn't make sense for the Scandinavians. It doesn't make sense for the Eastern Europeans who bought into the EU without understnding what they were buying into, they were blind to the deeper integration project, they just saw the subsidies and their eyes lit up. And of course it absolutely doesn't make sense for the UK.

The EU is a construct designed to answer 20th century questions, but is now being asked, perhaps unfairly, to come up with 21st century answers - and thus far not showing much indication of doing so successfully.
Jan Czaja Apr 8, 2017

MM,
She might be a "solution" if she can handle the Frexit in a successful manner. Frexit is more challenging than Brexit as it would require re-introduction of franc and debt re-domination. Judging by Mrs. May's handling of Brexit so far, overseeing Frexit is definitely not an enviable position. Is Mrs. Le Pen up for it? That's the key in my opinion.
- Steve Hurst Apr 8, 2017
  
  Jan
  
  France is estimated to have a 20% cost disadvantage versus Germany, has high taxation and public spending, and a citizenship - particularly in the public sector reluctant to reform. It cannot devalue currency in the euro. If it leaves the euro it will devalue. If it stays it has to reform. Either way wealth is lost. Le Pen promises a return to a golden age but has no calculation as to how to deliver it. If Le Pen does get in expect bonfires in the streets when they realise what it means. it is unproven what Brexit means at the moment other than a whole load of agro, nobody knows... but you should note the bizarre statistic that the Brits have stopped buying clothes so expect UK High Street apparel retailers to be in trouble (and expect sell advice in due course). Perhaps it is something about the emperor having no clothes, who knows
- M M Apr 8, 2017
  
  Jan, actually the two are very different, May can never be really in charge of anything and will never be able to manage the sequence of adverse events, the tasks ahead of her are very heavy and complicated and a single accident can derail and destroy everything whilst Le Pen and assuming she wins comfortably, she will have only the French house of representative and the French constitution to worry about, which in theory should not be a problem.
Henk Crop Apr 7, 2017

It is time to put the EU on the drawing board.
1. We have to abandon the idea of the Superstate. The goal that many in Brussel have in mind. The diversity of the member states is just too great to shape them into one universal block.
Instead the EU must become an Organization of Souvereign Nations. The object will be to find synergy in the EU. This leads to other goals and ways of cooperation.
2. The European Commission should be shaped like the Corporate Service Center in big companies and get a different role. No directive reponsibity but a role mainly as coordinator. Experts, working in close cooperation with the member states to achieve synergy. This will make the EU more flexible and prevent resistance from the member states.
3. The decision making process in Brussels is like a black box. Thereby played the 3 biggest countries a decisive role.
Also because the UK is leaving now the EU has become almost a German empire. Although Germany is a well managed country it is, in terms of people, a minority in the EU.
This cannot last and a greater role of the smaller countries have to be found.
4. The wealthier members in the North can be expected to pay some extra to build a stable Europe. It is however unsustainable that these members forever have to foot big bills, under the flag of solidarity. Limits need to be set there.
- M M Apr 8, 2017
  
  Henk, very good suggestions. The EU Commission should be focused on overseeing and managing the group, regulations must be kept with the sovereign EU states, it is counterproductive to have so many parties regulating just about anything, soon they will regulate the specific times a Moskito can fly and the penalty for non adherence. Robbing Greece through exhorbitant debts that can never be repaid, raiding the banks and robbing the Cypriots of their savings were not the EU Commision or the German establishment finest hours. HVR was presiding over these decisions. In brief, structural reforms at the level of all EU institutions, up and all the way down and very fast. Trump is now revamping all decision making processes. It is big times for smaller governments and very much less regulations and bureaucracies.
Jose araujo Apr 7, 2017

"For example, approved eurozone reforms have been implemented far too slowly; and additional structural reforms are not in the pipeline."

Are you simply crazy? We are growing, or at least no regressing because we ditched the "structural reforms"

We need less regulation from Brussels, and we need to stop the call for "structural reforms".

Supply side economics is dead, time to bury it.
- M M Apr 7, 2017
  
  Jose, they will think that you are being unfair. Structural Reforms are just other words for austerity measures...two sides of the same coin. Anyway, it seems Herr Shauble has finally recognised today that the EU project is under threat...it took over 8 years, for him to realise it, not bad for a record, hey.
Bernhard Kopp Apr 7, 2017

There is no serious reform opportunity within the existing framework - constitutional order, or the lack thereof. Unless the EU-27 plausibly decide what they want to be and where they want to go it will only mean tinkering around and infighting between 'federalists/centralists' and 'confederalists/nationalists' . This political trench-warfare between ideologies will slow down everything and result in a lost decade or more. Belgium may be able to survive a dysfunctional constitutional/state organization, and Mr. van Rompuy knows more about that, but EU-27 will not.
Henk Crop Apr 7, 2017

If they are that concerned about populism I can recommend a measure that may help.
Stop, effectively, the illegal immigration into the EU.
The world has to know that if you enter illegaly you will be detained and extradited, how long it may take.
The EU has to organize that and the European court of Justice has to provide the legal regulations.
Immigrants can only be legalized if a member state wants t o accept the immigrant.
The EU has played a slow and weak role sofar.
We have to consider that many millions of people in Africa and the Middle East would like to emmigrate to the EU.
People for which we have no work.
Morten Lynge Apr 7, 2017

As none of the 'solutions' in the article mention either a full fiscal eurozone union (with significant fiscal transfers from strong to weak members), or the controlled dissolution of the euro, it is not actually anything that remotely will solve anything.
There are two options:
1. Transform the eurozone into a full fiscal union... WITH transfers.
2. Dissolve the eurozone in as orderly a fashion as possible.
If none of these are done, the euro will eventually (probably when the next economic crisis hits), be dissolved in a DIS-orderly fashion, and might possibly take the EU itself with it.
- jagjeet sinha Apr 7, 2017
  
  @ML
  Neither # 1 nor # 2 will happen - fears of disorderly dissolution will keep the printing presses going. E.g. Greece.
  Depopulation of Regions in ClubMed will persevere - and facilitating assimilation without One Language no longer possible after Brexit.
  Meltdowns are under the boil so long as NATO guarantees boundaries - without the guarantees, blame game will target Trump.
  The German Commonwealth will flourish as long as France is able to deflect Migration away towards Germany / NordEurop.
  Without One Language and without One Fiscal Transfer Union - mysteries of One Currency that One Franz Ferdinand understands.
  Now operating as Satoshi Nakamoto.
- Peter Schaeffer Apr 7, 2017
  
  ML, You are quite correct. Those are really the only two real choices. However, Northern Europe/Germany can't/won't accept the reality at hand. The current "reform" nonsense will continue until doomsday. When doomsday will arrive is not clear. A sad (but accurate) parallel is/was Europe after WWI. The continent was a mess, but real solutions were unthinkable. The Dawes and Young plans simply put off the inevitable. Eventually the Depression came and the house of cards fell. It took a long time. The consequences were catastrophic. Europe is like the Bourbons. Europe has learned nothing and forgotten nothing.
Steve Hurst Apr 6, 2017

Greece is the poster child for the madness of the EU mindset. Greece is a country which imports food, imports medicine, has no great industrial or tech base, whose main asset is a sunny location suitable for tourism (18% of GDP), with a per capita GDP 2/3rds of the EU average, (its only notable export at present is its professional young heading elswhere), yet it is supposed to become German. It is like asking Montana to become New York. It simply is never going to happen in the foreseeable future. Normally if you have a real bad result from a experiment the last thing you do is put it into mass production, but that is exactly what the EU is obsessed about doing
- M M Apr 7, 2017
  
  +1...you made me speechless, Steve..
- Jose araujo Apr 7, 2017
  
  Good post
Steve Hurst Apr 6, 2017

80 years ago Picasso painted 'Guernica'. It still seems prescient whenever I read output from EU centralthink; just the bombs used are now called bonds. Its moved on a bit, we now have carpet bombing, sorry, carpet bonding - the idea is to bond everybody together with sovereign debt bonds into a carpet for the elite to walk on unhindered.

I didnt miss the threat of punishment called sanctions but I expect them to be called something else Orwellian in time, perhaps maybe called Southern Comfort on the Rocks

There is 'divergence' claimed in EU members policy. Well that is because there has never been convergence.

The mindset displayed in the text is interesting, it seems to imply that moving forward is intended as a principle burden for Germany and France. Perhaps this reveals the entire problem with the EU, asymmetry.

It seems to suggest circus strongmen - the siamese twins Franz and Francois at the bottom of an inverted pyramid of smaller strongmen. Firstly I am not at all sure Franz and Francois are convinced they should be surgically joined. Franz tends to dress one way and Francois the other. Secondly some of the smaller ones at the top of the pyramid like to fight everybody which means the pyramid is... err... unstable.

The article does touch on the need for elections to go in a particular way but doesnt seem to understand that economic policy - if it is even right - takes a considerable time to fruit and grass roots mood can move with more alacrity. In fact voters are also voting with their feet and migrating North, called depopulation in the locations they leave

Has anybody thought to ask non Germans and non French if they want to be frenchified or have the tonic of teutonic tutelage, doubt it. The Greeks do not appear to be enjoying their drink of Southern Comfort. The IMF seem to be suggesting its an explosive diuretic from a travelling salesman quack doctor

Personally I expect the ageing but steadfastly unemployed and disenfranchised youth to demand more not less at the ballot box and economic growth is required just to stand still with the ageing demographic in play. It will get very interesting when the current youth unemployed age into middle aged unemployed and face the overburden of paying their older even larger population of retirees

But tell me when the circus comes to town and I may pop down to see the strongman pyramid, hope nobody sneezes. The main problem however is the EZ cannot work because it is not a transfer union so the Guernica painting is more likely

The answer of course must be more debt, and even Einstein confessed compound interest rates were beyond his comprehension
- Jan Czaja Apr 8, 2017
  
  Steve,
  I agree with you completely. The only thing I wanted to add is that when they dissolve the euro, they should introduce a 2-year or so transition period and handle it in a manner that won't freak out capital markets. Anything else will probably plunge the new southern currencies even lower and only add on to their debt burden.
- M M Apr 8, 2017
  
  Steve, therefore the only quick solution to a zombie /non functional state of affairs, could very well be the one and only French L. Pen...
- Steve Hurst Apr 8, 2017
  
  Jan
  
  You are probably looking at ongoing economic problems in the Med Club, ongoing debt servicing problems, ongoing depopulation, ageing demographic problems, considerable social stress and concern. The Achilles Heel is the ballot box hence so much propaganda. EU intervention is probably going to be half baked. The process will take something like a decade before it becomes overwhelming but will remain unstable continually. Far from moving closer together the chances are countries will retreat whist giving lip service. They will try to back two horses in the race, 'ever closer' and 'decentralise', as both cannot win 'decentralise' demands less energy and is easier to sell to the ballot box. The public will not support 'ever closer' unless it benefits them and the asymmetry in the EZ damages the benefits. The problem for the 'ever closer' team is they have no other strategy and the institutional cost of failing is massive. The 'ever closer' team have already shown they do not want anything to get in their way and have a moral compass that only points True North. Economic problems are likely in the V4+ when EU handouts diminish. Schengen is pointless without the euro functioning so it is all down to the euro and no cost will be spared it trying to keep it afloat. If the euro goes Schengen goes and approx 2% costs are added to physical logistics, enough to cause economic problems. It could literally take decades to sort the debt out if the euro fails. Med Club currencies would slump, the Nu Dmark would rocket. The Nu Franc could be anywhere. Its all hypothetical but you get my drift
- Jan Czaja Apr 7, 2017
  
  So what's the answer Steve, more Europe or less Europe? Personally, my prediction is that they will do neither. Asumming Le Pen looses (I doubt centrist parties in Germany will get booted) and Italy doesn't vote for Grillo, we're in for more of the same ie lots of talk and no action, just gradual decline. In meantime, as you pointed out, a lot of people in southern tier will suffer. Hopefully, it won't end in a conflict when all is said and done.
M M Apr 6, 2017

This is a political article written for raising the self esteem of the past and present politicians. Mixing politics with finance is like mixing oil with water, it just won't work. The Juncker plans and all previous EU Commission plans have not worked because they were written by politicians for the politicians. The business community ( excluding the vested interests and the lobbyists) had very little say in them. For any policy or plan to work the community must be involved in it at all its levels which means in brief " Decentralisation, Delegation, Democratisation, and all other relevant words starting with De (other than Deuthchland)!. Furthermore, the EU Commission needs to listen a lot more to the communities it is meant to serve and help or assist the best it can in convincing the authorities or governments of these communities on the best course of action to follow instead of just regulating arbitrarily just about anything! Also, where are the decision makers within the EU Institutions, where is the transparency and accountability. The EU got itself a short reprieve thus far due to Brexit and Trump, so do not open the champagne bottles yet!
- Steve Hurst Apr 7, 2017
  
  MM
  
  That follows De_bt De_fault and De_pression
  
  Crowdfunding is needed to repair the can its been kicked down the road so long, GoFundMe @ Can Rompuy
- M M Apr 7, 2017
  
  Steve, they have many options opened for them if they wish to take any of them, failing that, they shall be left with the one and only option and that is De- Commissioning..
- Steve Hurst Apr 7, 2017
  
  M M
  
  You cannot decentralise a common policy. Decentralising means an end of the EU and reversion to a common trade area. Decentralisation means shut down the euro, shut down Schengen, the list goes on. There is already decentralisation in place, National Parliaments. The totem of the EU is the euro, take the euro away or have the euro fail naturally and its a straw man. It follows that there can be no decentralised EU. Its a bipolar situation. The key to the outcome is the euro and it is structurally flawed
- Henk Crop Apr 7, 2017
  
  MM
  Well put.
Peter Schaeffer Apr 6, 2017

"Barring the worst-case scenario of populist victories in the French election this May and the German election this September, European leaders should seize the opportunity later this year to pursue more ambitious, but pragmatic, reforms. "

If anyone needed more evidence that the European establishment is out of touch, they have it here.

Northern Europe (NE)/Germany has been pushing for reform in Greece and the rest of Club Med since the crisis started. Essentially zero progress has been made so far. Externally imposed reforms have a dismal track record in Europe (and everywhere else). Indeed, reform itself has a dismal track record (see Mexico for a poster-boy failure).

Countries with a high-productivity mindset do well. Others do not. Reform will not turn Italy into Denmark. However, the Euro can certainly kill countries like Italy and the reform fantasy can certainly be used to put off real changes such as abolishing the Euro.
- Henk Crop Apr 7, 2017
  
  Peter
  Well put.

http://prosyn.org/bntdiTi/de;

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