by Crazy Horse
Fri Feb 4th, 2011 at 06:17:07 AM EST
has an article in english regarding a new plan to coordinate EU economies, reminiscent of Wolfgang Schäuble's two-speed Europe proposal years ago.
She was interested in a productive atmosphere for talks because she wanted to win over Barroso for a far greater plan. It is a plan that has evolved slowly -- Merkel had to warm up to the idea herself -- and she knows that it won't appeal to the head of the Commission. Dubbed the "pact for competitiveness," the plan that Merkel has in mind could permanently change the structure of the European Union.
The idea, which the chancellor conveyed to her guest in English, calls for closer cooperation among the member states of the euro zone. It would entail more closely harmonizing their financial, economic and social policies. Merkel hopes that this would prevent the economies of the euro countries from diverging as much as they have over the past few years. If fully adopted, it would take European cooperation to a whole new level.
But now she intends to fundamentally change things. With her plan, the chancellor wants to do more than just go on the offensive politically. She has also set out to rectify the weakness that the former long-serving Commission President Jacques Delors considers a basic "design flaw" in the monetary union: Although there is a common currency in Europe, there is no corresponding common economic policy.
The Merkel pact aims to remedy this shortcoming, at least in part. According to the plan, the euro-zone countries would coordinate their economic policies far more closely in the future, thus playing a leadership role within the entire EU. What Merkel has in mind is essentially nothing other than the "two-speed Europe" that her finance minister, Wolfgang Schäuble, similarly proposed many years ago.
The "plan has been developed in secret, and is to be presented to the EU summit leaders on Friday. It was presented to Barroso last Tuesday. Thought this should have it's own diary for discussion, since it echoes themes already under discussion here.
frontpaged - Nomad
The Devil is likely once again in the details, but on the surface one can at least credit her for bringing up the subject. OTOH, the track record of recent EU economic policies leads one to suspect there's huge potential for a hidden shock doctrine policy to be foisted upon us all.
Her plan is ready, but there is still discussion about how to make it reality. Barroso told Merkel during last week's meeting in Meseberg that the European Commission wants to direct the process. Merkel, on the other hand, claims this role for herself and the other heads of state and government. There was reportedly a heated discussion concerning this point. "I will not allow the European Commission to be sidelined," Barroso told his aides afterwards. At least Merkel assured him in Meseberg that the Commission would oversee progress toward the plan's goals in the individual countries. She also said that he could attend meetings when the leaders of the euro-zone countries convene in the future.
What exactly is peering out between the lines?
In order to achieve these objectives as quickly as possible, Merkel is seeking support for an immediate program "that will be implemented on the national level within 12 months" (see graphic). This would entail the member countries adapting "the retirement age to demographic trends" and introducing financial policy rules that are modeled after Germany's so-called debt brake (an amendment to Germany's constitution that requires the government to virtually eliminate the structural deficit by 2016). Furthermore, within one year the countries would have to mutually recognize each other's educational and professional qualifications, as well as introducing a standardized means of assessing corporate tax to avoid so-called tax dumping (i.e. when countries try to attract companies by having an artificially low tax rate).
Let's forget for a moment that she brings up the "retirement" issue. Still, the standardized tax words in a manner of progressive framing would be a direction I might be able to swallow. Are we seeing a semblance of sanity here, or do i simply misunderstand what's happening?
Apparently, Der Spiegel has been reading Migeru.
Nothing demonstrates this as clearly as the Stability and Growth Pact, which the EU countries agreed to in the mid-1990s. The agreement was designed to ensure that national governments did not amass too many debts. But when Berlin and Paris violated the deficit criteria in 2003, they did not submit to the agreed-upon sanctions. Instead, the two most powerful countries in the EU managed to have the Stability Pact suspended. Thanks to their efforts, it was subsequently watered down.
Ahhh, here's the rub.
But this alone is not enough to effectively stabilize the euro, at least according to Merkel's analysis of the situation. There is also a need for coordinated tax, wage and social policies that the national states must agree to.
Then i end up finding myself in agreement with the head of Deutsche Bank, which is certainly a signal of trouble for my poor brain.
FDP euroskeptics are also under pressure because German industry supports the Merkel plan. "There is no question that we need closer cooperation in the economic sector," says Deutsche Bank CEO Josef Ackermann. "Everything that leads to better coordination makes sense," says Paul Achleitner, who is chief financial officer at the insurance giant Allianz, while Nikolaus von Bomhard, CEO of leading reinsurance company Munich Re, argues that one shouldn't allow oneself to be deterred by "shock words" like economic government.
Did all this happen under the radar (or have we already discussed this plan)? I'll leave it to the progressive pundits here figure out what all this means. For sure it's interesting to try and project where this could go.