Can Leopard Shed French Spots?

As I mentioned previously, the main tone I could detect within the European press in reaction to the announcement last week of the specific personnel and assignments of the new Juncker Commission team (to take office – barring any problems with confirmation before the Parliament – on NOV 1) was along these lines:

And with that I thought that the topic was exhausted. Not quite, though: one of the Brussels correspondents of the leading Dutch business daily Het Financiële Dagblad, Ulko Jonker, points out a particular aspect of that “fox guarding henhouses” syndrome that I had not realized, and that is too full of import to be left unmentioned. (Link is behind a paywall with a limited number of articles free per month for non-subscribers.)

Right then, Jonker’s list of EU Commissioner oddities includes:

  • The British commissioner in charge of bringing London to heel with Brussels’ financial regulations;
  • “[T]he Greek who has to carry out migration policy” (Actually, this was very smart: Greece is one of the main EU member-states charged with holding the line against illegal immigrants – principally along its short border with Turkey – so why not put the Greek Commissioner in charge?);
  • “[T]he Hungarian who can explain about citizens’ rights” (Aha, I did note this puzzling paradox in my previous post, it seems at least some elements of the Fourth Estate are taking note of Hungary’s creeping authoritarianism.);
  • “[T]he German illiterate who is responsible for the digital economy” (Harsh, but again this is essentially what I remarked on in that previous post.); and
  • “[T]he Cypriot who will do ‘crisis management'” (That would be Christos Stylianides, of Humanitarian Aid; I don’t get why he would not be up to the job.)

Jonker’s explanation for all this is up top in his lede: “The biggest difference between him and his predecessor José Manuel Barroso is that Jean-Claude Juncker has a sense of humor.”

Frenchman’s Collision Course with France

It’s not always so funny though, because surely the biggest paradox among the new Commissioners is France’s Pierre Moscovici, put in charge of “Economic and Financial Affairs, Taxation and Customs” – otherwise known as the “budget czar” since Moscovici’s DG is in charge of monitoring member-state budgets to ensure they adhere to the 3%-of-GDP-or-less standard – and to start proceedings for fining the EU government in question when its budget does not. And yes, it is France that looks set to be the greatest offender along these lines, with a projected 4.4% deficit for this year.

That would be bad enough: a new French Commissioner (who previously served many years as France’s Minister for Europe and Minister of Finance) whose responsibilities lead him to have to punish France. But, as Jonker points out in this piece, what is even worse is the French attitude on the matter, which from current French Finance Minister Michel Sapin is along the defiant lines of “yeah, we have a deficit that exceeds the rules – so what?” Now, it seems that France previously struck a deal with the Commission that it did not have to bring its deficit down under the Maastricht criterion of 3% until next year – but Sapin is also making it clear that that is not going to happen, either.

I say “that would be bad enough,” but for many observers it would be better stated “good enough.” For many economists cannot understand why that 3% Maastricht criterion is being enforced in the first place, when Keynesian economic theory (and, arguably, experience from recovering from the Great Depression in the 1930s) shows that the stoking of demand via government spending is the one sure way to get out of the serious economic crisis in which Europe now finds itself. So that Sapin’s stance is best regarded not as an isolated case of French bull-headedness, but rather a philosophical assault upon the very models and ways of thinking utilized by Moscovici’s Economic Affairs DG (and many leading European governments, most notably the German) to understand economic reality. (Plus, what sort of sense does that make at the practical level: a government doesn’t have enough money to cover its debts to the required level, so you fine it so that it has LESS money!)

Add to the consideration that it was the Commission’s errors of omission in 2003 in letting both France and Germany go unpunished for exceeding the 3% budget-deficit rule back then that started the crumbling of the EU’s credibility on the issue and arguably helped lead to the European sovereign debt crisis some seven years later. (We were writing about this here at EuroSavant even back then!) IF the Commission still intends to uphold that 3% standard – and, Lord knows, it has brow-beaten numerous other member-states (e.g. Ireland, Italy) into adhering to it no matter what the necessary economic and/or political sacrifices – then Moscovici will have to act in November, when he both takes office and receives the report is due out then from his DG officials that surveys member-state adherence to that standard.

But maybe he won’t act – in which case the principle that EU Commissioners are supposed to act in the interest of the Union as a whole and not the states they come from will take a body-blow. Surely, as the FD’s Jonker asserts in his piece, if that should happen then Commission President Juncker will step in to overrule Moscovici. Whichever way, mark your calendars for November as the EU’s currently prevailing “austerity economics” has its acid-test in a crisis involving one of the Union’s most important states.

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