August has now started, and this is the month Brussels notoriously empties out (together with Paris, etc.), you can’t find anyone who can actually make a decision, and so nothing can get done. But when they come back in September EU officials will face a full plate, topped by Brexit but also refugee policy (the incoming hordes have now notably shifted to Spain), Poland/Hungary, Trump, and all sorts of other things. None of those is a particularly pleasant subject, so the EU mandarins will surely cherish all the more any good news on their agenda – like Bulgaria know knocking on the door of that EU club-within-EU club, the Eurozone, as Martin Ehl recently reported for the Czech business newspaper Hospodářské noviny.

This is nothing particularly new. Rather, we’re just past an important milestone for this effort by Sofia (no, not any female but rather Bulgaria’s capital), which namely happened in June when the Bulgarian government struck agreement with Eurozone officials on a program of six economic/financial requirements the country will have to meet by June of 2019 to then be admitted into the so-called European Exchange Rate Mechanism II (ERM II), a monetary arrangement allowing a divergence of only ±15% around a set central rate. It is standard that any given national currency be subject for at least two years to ERM II before that country is allowed to adopt the euro.

Membership Requirements: No Sweat!

For Bulgaria, upholding that ±15% should be no problem, as the Central Bank has long had its currency, the lev, “shadow” (i.e. stay close to) the euro around a fixed point (and before that, the lev “shadowed” the deutsche Mark). When it comes to the three fundamental criteria for euro membership, as well, Bulgaria meets them all with room to spare:

• Inflation: 1.4% in 2017 (1.9% max allowed)
• Government budget deficit: Actually had a surplus last year of 0.9% GDP (max allowed deficit is 3%);
• Overall government debt: Now 29% of GDP (max allowed 60%)

It is hardly unknown for central bank authorities to have their national currency “shadow” a dominant neighboring currency, even though such a policy effectively means giving up control of national monetary policy to that “shadowed” money: the Netherlands authorities long had the guilder shadow the deutsche Mark, while Denmark still today does the same for its krone with regard to the euro (it’s the only other country currently within ERM II).

(more…)

Here’s some news that I have not seen reported elsewhere, and I really don’t know why:

That’s 12.1 billion, as in euros: it is a surplus, and it is the bottom-line result of the German Federal Government’s budget over 2015. Further:

The reasons for this are the good economic conditions and high level of tax-receipts. For Finance Minister Wolfgang Schäuble (CDU) this surplus turned out to be double as much as was expected in November.

No wonder we see Schäuble there leaning on his hands with such a smug look on his face: for him, it’s job well done!

Actually, good economic conditions pretty much automatically mean high tax-receipts, at least for any government which has its act together in the tax-collecting department, which Germany certainly does. But where did those good economic conditions come from? Well, the Germans do what they do well, as everybody knows; among other things, that means a healthy Mittelstand or layer of mid-sized companies (usually privately owned) making all sorts of capital equipment held in such regard by the rest of the world that demand for it is largely price-inelastic (that is, that demand takes little or no hit even if prices rise, e.g. due to currency fluctuations). The result is Germany’s long-standing status as the world’s #1 exporter, these days contested only with China.

So there is all that, a set of character traits contrasting sharply with others said to be more typical of other areas of Europe (mainly to the South) now experiencing quite worse economic conditions. Germany also implemented its so-called “Harz Reforms” around ten years ago, consisting of a series of changes to labor market regulation which made it easier to hire and to fire workers, and which resulted in a suppression of German labor costs which made the prices for native manufactures even more competitive internationally. And finally there is the effect of the euro: No matter how much it might be derided there (e.g. as the teuro, from the German word for “expensive”), one thing that is clear is that, by taking away Southern European nations’ ability to devalue their currencies when their own products became too uncompetitive, the euro locked in a high degree of export superiority for goods from the North, and thus flows of money there – and so relative prosperity, and high tax-receipts. (This also can mean – to some extent – that the economic troubles afflicting Europe’s periphery are not these countries’ fault.)

So Where to Spend the Bounty?

That big pot of money is there – billions of euros, twice as big as had been expected – so the question naturally arises: What to do with it? Ideally, having accumulated in German Federal coffers, the money would be spent in such a way to recycle it back to the other EU states from which it largely came, in such a way to share the wealth and the prosperity a bit more broadly around the European continent. This could be something as simple as an accelerated raising of German workers’ wages, so that they spend more and some of that more they spend are goods and/or services from elsewhere in the EU.

That’s not what is going to happen, though. Rather, according to this piece, much of the money will go to the obvious need: Wir schaffen das!, i.e. “We can do it!” That is, it will be devoted to dealing with the flood of Third World asylum-seekers of which more than 1 million have shown up on Germany’s doorstep through 2015 (with many more expected still to come). The German government largely attends to this problem by sending money to the lower-level Bundesstaat and local governments that actually have to deal with the incoming refugees on the ground. So these elements will get more money. (Not that that will solve the problem; it has become clear recently that considerable political and inter-cultural obstacles also need to be addressed, with solutions that largely cannot only rely upon money.)

There is also another consideration. Successful governing in Germany necessarily means keeping in the back of one’s mind the Biblical tale of Joseph in Egypt, of the seven fat years followed by the seven lean years. German official have to be especially careful with their budgets, considering that an amendment they passed to their Constitution in the recent past mandates that the federal budget deficit be no more than 0.35% of GDP – and that provision comes into effect starting now, in 2016. That means any surplus – no matter how unexpected it may be – to some degree must be husbanded with a view for any bad times ahead (although that same amendment permits greater deficits than 0.35% of GDP in case of national emergencies, whether economic or natural-disaster in nature).

This mandated caution looks even more reasonable in light of some additional news:

Germany’s economic growth for 2015 is expected to come in at 1.7%. What is more, more-or-less the same rate is expected for calendar 2016. Many would see that as low – especially in comparison to economic growth in developing countries, especially China. It’s pretty much also low in comparison with rates that the US is starting to hit again.

Then again, compared to European standards, 1.7% is pretty good, due to Europe’s (and especially Germany’s) continued graying and population loss, over-regulation and other factors. Further, as this FAZ piece adds, “comparatively few currently have to worry about their jobs: The situation on the labor market is at a historically favorable level.”

Still, in absolute terms you could say 1.7% is low. As we see, Germany has been able to extract from that a very nice federal government budget-surplus. But one must still be cautious.

The tweet reads “High time for a parliamentary investigation into the euro.” Could they be talking about Greece?

For indeed, doubt was thrown on Greece’s continued membership just yesterday, by Finance Minister Varoufakis, in the event that Eurogroup ministers refuse to accept Athens’ own ideas about how to deal with its tremendous burden of sovereign debt. This despite that fact that there is no mention in the treaties underpinning the Eurozone for any member leaving it, much less any prescribed procedure. Still, there is neither any authorization nor prescribed procedure for, say, giving birth during a transcontinental airline flight, yet that does happen from time to time; if/when the emergency arises and Greece just has to return to the drachma, they’ll surely find some way to do it, with or without formal EU treaty provisions.

In any event, this tweet (from the right-wing Dutch political blog Dagelijkse Standaard) does after all call for a parliamentary inquiry, and cuts closer to home. This is a petition directed to the Netherlands parliament, initiated by a group of political commentators led by a certain Thierry Baudet. Still only in his early 30s, Baudet already has a string of publications to his name, most of them in a Eurosceptic vein, decrying the threat to the nation-state posed by the super-national European institutions. More directly relevant, he also succeeded back in 2013 in having a referendum submitted to the Dutch Tweede Kamer – that is, he gained more than the 40,000 signatures required to put it to the attention of the parliament – which was to be “concerning the future of the Netherlands within the European Union.” The Tweede Kamer did duly consider the proposal, then rejected it.

Unsurprisingly, the group behind this latest proposed referendum has its own website, complete with a dedicated page to “Why a parliamentary inquiry over the euro?” Key to their argument is their assertion that it was assumed Northern European lands would allow themselves to become responsible for the fiscal failures of Southern European lands.

Despite what was claimed later, this perverse mechanism was amply foreseen by politicians. As Romano Prodi, president of the European Commission at the time when the Maastricht Treaty was concluded, said, “The difficult moments were predictable. When we created the euro, my complaint as an economist was (and I discussed this with Kohl and with other heads-of-state): how can we have a common currency without shared financial, economic and political pillars? The answer was: for now we have made this leap forward. The rest will follow.”

And:

It continues to surprise us how it could have been possible for such a radical decision to be paired with such little critical debate. What role did the government play here? How is it possible that politicians did not take more care over the financial stability of our country? What did those involved know precisely about the risks? And what did they not know? . . . Did people realize that this euro eventually would make necessary a very great transfer of power over to Brussels – such as the banking union, the stability pact and the upcoming budgetary union?

So they want the Dutch parliament to look into such questions, obviously with a view towards taking further concrete measures should unsatisfactory answers be revealed.

First of all, again, there is no explicit procedure available for any country now using the euro to ditch it for another currency – although, granted, that procedure can be made up on the fly, but surely not with great accompanying financial and economic chaos. More importantly, although this conservative group can probably once again get their 40,000 signatures to bring this measure before the Tweede Kamer as well, the question of the Netherlands in the euro is surely settled for now. There is no sign at all of any truly widespread political rejection by the Dutch populace of the common currency.

Indeed, economic analysis has tended to show that the euro has greatly benefited those Northern European lands heavily involved in trade and able to keep their labor costs in check – such as Germany, especially, but also the Netherlands, both of whom have seen their terms of trade steadily improve since the introduction of the euro in 1999 against Southern European lands with less ability to hold costs down. This widening gap between those advantaged and those disadvantaged by the euro contributed substantially towards getting everyone in the sovereign-debt mess we find ourselves in now – well, except for Germany and the Netherlands (again), plus a few other Eurozone countries (and Denmark) who find that they can actually ask borrowers to pay them to take their money on loan these days, rather than actually pay positive rates of interest.

This initiative must therefore be counted as merely a cry from out of the Dutch conservative wilderness. To the extent anyone takes it seriously, it is surely not constructive, in that doubts concerning any Eurozone member’s commitment to the euro are not useful just now as that grouping has to decide what to do about Greece’s new governing regime and its demands to cut down austerity. It’s rather the Greek people who need to examine the depth of their commitment to the euro, and thereby their level of support for future negotiating maneuvering by their Syriza government which we can surely expect more of in the near future

A quick note here on the latest entry on The Economist’s “Eastern approaches” blog entitled “Poland’s foreign policy: A shaky compass.” (Subscription required – well, you do get to look at one article per month for free, make it this one!)

The point here is that Poland’s Foreign Minister Radosław Sikorski sees his country’s swift adoption of the euro as a needed response to the turmoil to the East. From the article:

Ditching earlier concerns by former finance minister Jacek Rostowski, Mr Sikorski called for Poland to move rapidly to adopt the euro – the last core European institution to which Warsaw does not yet belong. “The decision about the eventual adoption of the common currency will not have just a financial and economic character, but rather it will be mainly political, dealing with our security,” said Mr Sikorski.

This view has yet to gain much traction. . . . Recent polls show about two-thirds of Poles opposed to joining the euro.

First let me note that Poland has a treaty obligation to join the euro, under terms of its 2004 accession to the European Union. But then let me add that this is an obligation to do so eventually, and that Poland will not be allowed in until its economy and the złoty pass a number of real-world tests – something over which any Polish government will naturally have a great degree of control.

But there is a larger point here, which is the strange continued attraction of the euro to certain (EU and non-EU) countries, even while other member-states regret it and some are indeed seriously suffering under it. That attraction is self-evident in the accession to the euro of Estonia in 2011 and Latvia just this past January 1. And now we have Poland – or at least that country’s Foreign Minister.

Can his assertion really be true that adoption of the euro will help strengthen Polish security? It really seems unlikely. Surely a more profound discussion is to be had concerning under what circumstances Eurozone membership really can benefit a country. It’s possible that such a discussion would sooner be characterized by many economists as a “reminder,” but surely things that we thought we knew along those lines need to be reassessed in light of the terrible track-record since the outbreak of the European sovereign debt crisis in 2009. And soon, please: Lithuania is all set to join its fellow Baltic states in the Eurozone as of January 1 of next year.

Meanwhile, beware of hysterical Polish political discourse. I don’t necessarily mean Mr. Sikorski’s assertions quoted above; I rather mean this from the end of that Economist piece: “[Polish Premier] Mr Tusk on Friday said that some members of the opposition, with their Eurosceptic views, posed a ‘mortal danger to Poland.'”

In this space we recently covered a new political party in Germany dedicated to discarding the euro. But what happens when the same thing happens from the other end of the EU’s economic spectrum?

#Grecia: nasce Drachma Movimento Democratico Cinque Stelle, il Beppe Grillo greco: “Basta austerità” #m5s http://t.co/fQaN9kp0XO

May 20, 2013 12:12 pm via The Huffington PostReplyRetweetFavorite

@HuffPostItalia

L’HuffPost

Yes, you see “Beppe Grillo” there in that tweet, which is written in Italian, and it’s certainly true that Grillo’s “Five Star Movement” is anti-euro. But I’m talking here about a new Greek party, one that was registered by the Athens authorities only last May 2, namely the “Drachma Five Stars Democratic Movement” which in its very name pays homage to Grillo’s Cinque Stelle (= “Five Stars”) movement.

What does this new party want? Mainly a referendum in Greece over whether to stay in the Eurozone. But it does have a formal five-point program:

1. Renunciation of the Memorandum signed with the “troika” (EU, European Central Bank, IMF) which has imposed the current austerity policy in return for financial help;
2. A return to the drachma;
3. “Self-development” (meaning unclear);
4. Social justice; and
5. National dignity.

This piece by Gabriele Vallin in the Huffington Post’s Italian edition does not indicate how much popular support this “Drachma 5-Star” party has attracted, but again, it’s brand-new. It does feature an interview with the party’s founder, Theodore Katsanevas, Professor of Labour Economics at the University of Piraeus. (more…)

Zounds! When you finally get a bunch of people willing to stick their heads above the political parapet, why do people become so intent on shooting them down?

Anti-Euro-Partei: Alternative für Deutschland gerät in Turbulenzen http://t.co/ANI6ig97Dd

April 23, 2013 3:09 am via SocialFlowReplyRetweetFavorite

@welt

DIE WELT

For there’s a new political party in Germany, as of a week ago last Sunday, the Alternative for Germany. Here’s a taste of their homepage, so you can see what they’re about:

Chose the Alternative!
Enough with this Euro!
The Federal Republic of Germany is stuck in the most difficult crisis in its history. The introduction of the Euro has proved itself to be a fatal mistake, that threatens the prosperity of us all.
The old parties are all crusty and worn-out. They persistently refuse to recognize and correct their mistakes.
Therefore we have founded the ALTERNATIVE FOR GERMANY!

Whether you welcome this development I suppose depends on what you think of the euro. At least it testifies to the openness of the German political scene, that a new party can be founded so easily. There are drawbacks to that as well, though, as any political scientist could tell you. Anyway, any party has to receive at least 5% of the vote in any German parliamentary election – state or federal – to get its members into that parliament. Lately it had seemed that the only new political parties being formed were from the Nazi fringe. (more…)

Geography buffs find particularly interesting places in the world where major urban centers come close together but under different jurisdictions: the greater New York City metropolis, say, or the Liège-Maastricht-Aachen area in NW Europe. But there is one other that is more interesting even than these, featuring major urban centers once divided by the Iron Curtain during the Cold War, and that is the Vienna-Bratislava area along the Danube. (Which, if you enlarge it even further, also includes the Hungarian city of Mosonmagyaróvár – OK, we’ll forget about that one for now . . .)

Indeed, a major Bratislava residential area known as Petržalka (to the south, and infamous for its very many drab panelák Communist pre-fab high-rise apartment buildings, still there today) has for years crowded right up to the line beyond which no one was allowed to be seen, lest they be shot. Ever since that regime fell in 1989, travelers heading to Bratislava on the bus from Vienna’s Schwechat airport (e.g. your humble blogger) have still found it remarkable the way the villages and fields lying to that city’s east abruptly give way to crowds of buildings once you cross the border.

But now there is no more “border” – that part of the world is now in the EU’s Schengen Area. Slovaks are no longer constrained, and so now they’re breaking out::

Novinky: Bratislavané se stěhují do Maďarska a Rakouska: http://t.co/8XyLzZ69

January 4, 2013 1:14 pm via twitterfeedReplyRetweetFavorite

@Zpravy

Zpravy

“Bratislavans are moving to Hungary and Austria,” it reads. Yes: “moving,” as in “house.” This article – and note, it’s on a Czech news website – mainly discusses Slovak settlement in two neighboring places, namely the Austrian village of Wolfsthal – which you ride through on that airport bus – and the Hungarian town of Rajka, in the other direction but still only about 20km from Bratislava.

As recently as 2007, there were only three Slovaks in Wolfsthal, out of a population of around 720; now it’s 230 Slovaks making up a population of 900. The mayor, Gerhard Schödinger, certainly speaks Slovak – he has a Slovak wife! (And he used to be an Austrian customs official, back when there was a border.) As we can see, he also makes sure that the public signs dotting this Austrian town are bilingual German/Slovak. The Slovaks living there like it mainly because, well, everything is so German – “It’s peaceful here,” says one, “with beautiful Nature, order and safety in the streets” – but also because the Austrian government offers great social welfare benefits, topped off by easily-attainable and cheap loans of up to €50,000 for home improvement. (more…)

The beginning of the year coming up, 2012, offers a rather bittersweet anniversary. Do you remember? It was from midnight on 1 January 2002, literally as fireworks still lit up urban skies, that euro banknotes first issued from ATM machines inside the 12 original Eurozone members, and that banks and merchants first returned eurocoins in change, all of those with a national emblem reflecting where they had been minted on one side.

No prize for guessing why any commemoration of this 10-year milestone is lacking so far in the press – everywhere I look, really. For 2012 promises to be a difficult year for European national finances, and therefore for the euro; to many, an exit from the Eurozone of one or several states is likely, and from that possibly even the common currency’s “collapse” (although I think that, no matter what, there will be a rump core of states – Germany, Netherlands, Finland, etc. – still using it for quite a while).

But enough of this depressing talk! We have all read and heard quite enough of it, at least before the onset of the holiday season (when the bureaucrats and bank officials in charge left their desks for a while).* Let’s rather follow the Luxembourg lead and consider the euro from a different perspective:

http://t.co/eNBpc2Z7 Dix ans de l’euro Pas vraiment de mixité dans les porte-monnaie http://t.co/b3mtHfyx

December 27, 2011 12:40 pm via HootSuiteReplyRetweetFavorite

@luxembourg_news

news luxembourg

That perspective is “integration,” always a hot European topic: to what degree are the various European peoples mixing with each other and getting along while they do so? Except that here, in this essential piece from the French-language Luxembourg paper L’essentiel (no byline), the subject is rather the degree to which all the various eurocoins are mixing with each other in people’s pockets. The lede:

Ten years after the arrival of the euro, the coins which sport a national symbol on one face are not yet totally mixed in European wallets.

(more…)

Currency reform: Back in Cold War times that phrase always sent a cold shiver of fear down the spines of those living in the Communist Bloc. What seemed so reasonable in the government announcements – hey, too many zeroes have accumulated on the currency through inflation, let’s simplify things by knocking some of them off all prices! – all too often turned out to conceal hidden measures designed to punish earners of “black” wages (by forcing them to go to official offices to exchange the cash hoard they were holding that was about to become worthless) or even simply eliminate large swathes of purchasing power from the economy (e.g. by declaring notes of certain denomination to be no longer valid).

Citizens of what was then known as the “Free World” have by-and-large been spared such abuses. Indeed, here in the Eurozone we have the common European currency, a medium of exchange not subject to the whims of any one national government. What’s more, it was adopted on 1 January by yet another EU member-state, Estonia. Yet that was recognized by most observers as somewhat of a bittersweet occasion; taking up the euro does say important things about the extent of that country’s European integration, yet the sovereign debt financial crisis with which the EU has struggled for a little over a year has revealed several cogent reasons for a country to regret ever giving up its own national currency.

But I’m not out to talk about any of those here. Rather, let’s get back to the “currency reform” scam: it’s the damndest thing how prices seem to rise whenever a country adopts the euro! You see, all prices, wages, etc. have to be converted then by a fixed conversion-ratio – for example, it was 2.20371 for the Dutch guilder – and usually the new price that results is not a very round number. No, much better to make it so – and do you think that merchants then round it upwards or downwards?

Any of you out there over the age of twelve knows the answer quite well – strange, isn’t it, how wages and bank-account totals don’t benefit from a similar rounding? – and so the result inevitably is an otherwise uncalled-for bit of inflation. That’s what made the Germans nickname their new currency the Teuro (teuer is “expensive” in German); on a local note, I can remember how Amsterdam bars, in particular, raised their prices under the quite shameful assumption that their customers were not capable of doing elementary division with a calculator.*

Naturally, then, the same thing has come to Estonia, as we see in a pieces from the Polish national daily Gazeta Wyborcza: Inflation in Estonia highest for two years. Specifically, December’s inflation rate was 5.7% higher than it was in December, 2009. (And how much was that? Annoyingly, the article prefers to use differential rather than absolute inflation rates.) We do know that inflation was high there throughout the last part of the year, as last month’s rate was also only 0.5% higher than last November’s. The main commodities driving this are listed as mainly foodstuffs and non-alcoholic beverages. (Can we hope, then, that the owners of Estonian drinking establishments actually restrained themselves?)

Anyway: Welcome to the club!

*Interestingly, grocery-store prices were mainly converted in a straightforward manner – mainly because Dutch consumer-rights organizations promised to watch them like a hawk!

Enough of the levity (see previous). It’s time to get serious – even “apocalyptic.” Specifically, The apocalyptic cost of the collapse of the Eurozone, a recent entry on the blog of Libération’s famed Brussels correspondent, Jean Quatremer.

That article basically calls attention to a recent, publicly-available and English-language study from ING Bank (main writer: Mark Cliffe) entitled “EMU Break-up: Quantifying the Unthinkable.” It’s quite an eye-opener, and Quatremer has performed quite a public service in calling his readers’ attention to it. For the “unthinkable” when it comes to the euro has become quite a bit less so this year, including the two “unthinkable” extremes between which Cliffe structures his report’s analysis: 1) The departure from the Eurozone of Greece (only), and 2) The collapse of the whole thing, with the current member countries simply reverting to their currencies of prior to 1999. Both developments, and various others in-between, have increasingly been raised as distinct real-world possibilities, and not just as horror-scenarios but also as measures to be induced deliberately (particularly the ejection of Greece) as punishment for the fiscal failings of various naughty governments. (more…)

You might have become aware late last week of a brief kerfluffle involving the new Hungarian government of Prime Minister Viktor Orbán. It didn’t involve Orbán directly, however, only some figures closely associated with him, such as another top figure in his FIDESZ political party, Lajos Kósa (mayor of Hungary’s second city, Debrecen), and Péter Szijjártó, his government spokesman, who together spread the word to the world at large that the Hungarian budget deficit was actually rather higher than previously reported and that their country could soon find itself in a simlar fix as Greece. This quickly led to a mini-financial panic breaking out the world over – including in Far Eastern markets, which suffered price-losses – at the thought that the EU suddenly had another fiscal basket-case member-state to deal with, one that moreover had already had a joint EU/IMF bail-out back in 2008.

“Sorry – did we say that? We weren’t really serious” was roughly the reaction from that same Hungarian government once they realized the wide-ranging storm their comments had unleashed. Clearly, the amateurs were now in charge within that government’s highest reaches, and you can get a quite informative treatment of the incident – with pictures of the major protagonists – from the realdeal.hu weblog. There writer Erik d’Amato makes a convincing case that all this was simply an attempt by the new government to position itself politically to impose some austerity measures in its upcoming budget, albeit one that went spectacularly awry.

But such incompetence cannot go unremarked upon for long, and as the Danish daily Politiken reports (Hungarians go off on top politicians’ mysterious pronouncements) feedback has now started to arrive. For one, the economics editor of one of the major national dailies, Zoltán Baka of Népszabadság, called last week’s pronouncements “completely idiotic.” The IMF chief, Dominique Strauss-Kahn, also told the Associated Press that, in his view, there is “no basis to be worried” about Hungary’s fiscal situation. Other European finance ministers, however, couldn’t be bothered to offer an opinion: they are busy these days trying to find a solution to the ever-weakening euro, whose recent downward course last week’s Hungarian mini-fiasco only served to accelerate.

The finance blog Naked Capitalism today linked to a current article of high interest which happens to be available only in a foreign language, in this case French. I’m referring to the interview with French Finance Minister Christine Lagarde in the business newspaper Les Echos – newsworthy at any time, but of crucial interest appearing just now.

This is not the first time this has happened on Naked Capitalism, but my intent here is certainly not to scold. In many of those previous instances I have been happy to step in and provide a translation of the article in question on this site, and I do the same below after the jump with the Lagarde interview. The piece’s lede is “‘There’s a determination to construct a new edifice, to reinvent the European model,’ declared the Minister of the Economy in an interview with Les Echos.” (Interviewer’s questions are in bold.) (more…)

I have to assume that my Euro-savvy readers will be quite aware of the growing financial crisis involving the euro and the so-called “PIIGS” countries that are in fiscal trouble (“Portugal, Ireland, Italy, Greece, Spain,” though these days Italy is usually left out). Greece is at the center of attention now, and the main issue when it comes to its fiscal problems – combined with its government’s dishonesty in reporting these in the past – seems to be the conflict between the emotional impulses to bail it out from EU or European Central Bank funds or punish its sins instead by simply letting the country suffer. The EU summit in Brussels on Thursday (11 February) is shaping up to be decisive in deciding which way things will go – assuming that the assembled EU heads of government discuss the problem in the first place, as I understand that that is not really on their formal agenda!

The dominant EU country within the governing structures of the EU and the European Central Bank is of course Germany, which is also the main economy in an opposite fiscal situation to that of the PIIGS states and so theoretically able financially to provide much of the aid that Greece needs. That is why it has been interesting to read coverage of this problem in Die Welt, the mainstream German paper not quite as authoritative as Die Zeit (and the latter is more of a pure opinion-publication anyway), but still with a respected reputation as a daily that is distributed nationwide. (more…)

Hungry for some sort of financial news now, at the beginning of a brand-new year, that’s actually good, that reflects things flawlessly going ahead according to plan? How about this: As of 1 JAN 2009 Slovakia adopted the euro as its currency, just as the European Central Bank (ECB) and various other responsible Euro-authorities had authorized it to do last May. That’s right: Slovakia – I mean, who even knows where that place is? It was only a separate country as of 1 JAN 1993, yet it has beaten out (among others) its former big-brother state, the Czech Republic (which could be said to date back to Greater Moravia of 833 AD if you’re willing to stretch the affiliations a little bit), and Poland (dating from 966 AD) to the safe-haven of the euro. And make no mistake: these days the euro-zone is definitely the sort of currency safe-haven that all sorts of countries still standing outside it (e.g. Poland, Denmark, Iceland) wish that they were within, given the demonstrated weakness of numerous small-state-currency regimes.

Against this background, it’s amusing to take a look at comments from the Czech press. (more…)

It was heartening to read, from this European vantage-point, the article about Suddenly, Europe Looks Pretty Smart in the New York Times last Saturday, mainly describing the European “bailout plan that has now set the pace for Washington, not the other way around, as had been customary for decades.” At the same time, so far the poster-child victim of the financial crisis has been poor Iceland, a country that is rapidly running out of foreign exchange with which to pay for any imports and so is in contact with the International Monetary Fund for a rescue. But Iceland has gotten some company in the IMF petitioners’ ante-room recently from (among others, but just to name a European country) Hungary. The three Baltic states – Estonia, Latvia, and Lithuania – are likely soon to join them there, although of course the European Union is also offering its own assistance.

So Europe may look “pretty smart,” but still European countries can suddenly find themselves in a deep financial hole in the present dire international conditions – yes, even EU member-states like Hungary and the Baltics. The one common denominator that seems to remove a European state from vulnerability, though, is membership of the Euro-zone, i.e. those 15 states out of the 27 member-states of the EU who use the euro as their common currency. Hannes Gamillscheg of the Frankfurter Rundschau recently picked up on this phenomenon (The guardians of the crown – alone) but from the point-of-view of a couple of those countries now outside the Euro-zone who in the past have explicitly rejected opportunities to come inside, namely Denmark and Sweden. (So the “crown” in the article’s title refers to the two different “crowns” that are those countries’ currencies.) (more…)

Lately in EuroSavant we’ve been reviewing articles complaining over economic slowdowns in the Netherlands and in Germany – “complaining” from outsiders’ points-of-view, that is, so perhaps you can assume some element of Schadenfreude. Now comes a piece in the German opinion newspaper Die Zeit (United in Stagnation) advising us not to count too much on the European Union to pull such countries out of their economic problems, not if the draft EU Constitution is any guide. At least when it comes to economic policy, author Petra Pinzler writes, that Constitution is “as superfluous as a bicycle for a fish.” (more…)

The votes are in, the Swedish people have spoken: 56% of the voters said “No,” and so they prevail, for a while at least.

I had hoped to find something interesting to tell you about the referendum’s result in the national press of Germany: the nation that, after all, was once the guiding power behind the idea of one single currency for all of the EU, yet which now, by its misbehavior in getting its own fiscal house in order and staying under the 3%-of-GDP limit for government budget deficits, is quite possibly driving away those EU members (such as Sweden) who do not use the euro but are/were contemplating that. But the on-line German newspapers that I’ve looked at for today aren’t very on-the-ball: they’ll tell you little else than what you already will have been able to find out from your own newspaper of choice (with one exception, noted below). OK, they quote Bundeskanzler Schröder lamenting the continued absence of Sweden from the ranks of EU countries using the euro. Well, he would lament, wouldn’t he? I’d definitely file that bit of news under “dog-bites-man.” (more…)

Outside reality intruded for a while to hold up my planned survey of commentary in the Danish press over the murder of Swedish foreign minister Anna Lindh and the effect of that incident on the upcoming Swedish referendum over whether to adopt the euro. But I did gather the relevant URLs on the subject from the main Danish on-line dailies, and am posting this early enough for there still to be suspense about the referendum’s outcome (for prompt EuroSavant readers, anyway.)

I start with Berlingske Tidende’s rather simplistic editorial leader, Svenskernes valg, or “The Swedes’ Choice.” (more…)

That’s the title of an interesting commentary piece in the latest Die Zeit by Uwe Jean Heuser – a remarkable mea culpa for Germany from a German writer, which puts into stark relief the striking (if rather unfortunate) ironies attending the birth of the Euro and the current state of finances in Euroland (that is, in those twelve-out-of-fifteen EU countries that have adopted it as their common currency). (more…)

Czech President Václav Klaus doesn’t want to reveal his voting preferences in the Czech EU accession referendum, to start on Friday – although he certainly promises to vote. (Indeed, he’ll be voting soon after polls open on Friday, as will premier Spidla and ex-president Havel and their wives.) Revealing his presidential preference is not his presidential function, he says; his pres. function is “rather to give arguments, to shake up citizens so that they think about these things.”

But you know this already, since you’ve read yesterday’s EuroSavant entry. Still, on Wednesday Klaus granted an in-depth interview to Lidové noviny, his favorite newspaper. (He used to write a regular column for it.) This interview deserves in-depth examination, since it lays out many of the Czech President’s shall-we-say unconventional and even abrasive views on the referendum and on Czech EU membership in general. Maybe we’ll finally get some “asking of the tough questions,” the absence of which I decried in my long entry about the Polish referendum of last weekend!

(Before we go to “More…”: Sick of Poland? Sick of Czech? Sorry about that. Remember, EuroSavant is also versatile enough to do France, Germany, the Benelux, who-knows-what-else. We’ll get back to other parts of Europe soon, but I did want to take a good look at these once-in-a-lifetime accession referenda. Anyway, if you don’t like this weblog’s direction – e-mail me! I might be so taken aback as to actually listen to what you say!) (more…)

Here in Wroclaw, it’s a bright and sunny first day of voting in the Polish EU accession referendum. More guerrilla anti-EU material has popped up, in a last-minute attempt to change people’s minds – this time, it was in the form of posters showing the famous EU twelve-yellow-stars-on-a-dark-blue-field emblem – with a swastika in the middle, and the caption up above “Rozbior Polski” – the partition of Poland. That should strike a chord with historically-oriented Polish voters: in the famous 18th-century partitions of Poland, Poland’s neighboring states (then Prussia, Russia, and the Austrian Empire) agreed among themselves to simply reach out and grab the pieces of Polish territory that they wanted, and Poland was too weak at the time to do anything to defend herself. There were three of these land-grabs, and by the end of the third there was no more Polish land to seize any more, as it all had been taken – and Poland was not to re-emerge as an independent nation for more than a century, namely in 1918 directly after the First World War. (more…)