June 22, 2010
Listening to EU leaders‘ calls for “economic governance”, or gouvernement économique in French, you’d be forgiven to draw the conclusion that this is a done deal and the only question is when it will be launched.
But not everyone is thrilled about this in Euroland.
Friday’s Frankfurter Allgemeine Zeitung, one of Europe’s most prominent newspapers, featured a letter from four German top economists (Hans-Werner Sinn, Clemens Fuest, Martin Hellwig and
Wolfgang Franz, see photo), all of them government advisors.
They write that
Europe doesn’t need an economic government to save the Euro, but rather political and economic mechanisms that will effectively limit the public and private indebtedness of the member states.
They warn against
prolonging the bailout packages in their current form…To renew them would mean to contribute to further destabilisation of the Eurozone. The emergency packages entail a complete ransom by creditors who do not need to bear even part of the risks that they have created.
(referring to how the bailout of troubled countries is really a bailout of Western European banks)
They go on: “it would be a grave mistake to introduce common government bonds” saying that “These would perpetuate joint liability and ultimately destroy the institutional basis of a solid financial policy in
Instead they propose “ten measures to save the euro”, which mainly include recommendations to prevent debt figures from getting out of hand.
This followed a warning by Professor Charles Blankart, who last week warned against a Brussels “economic dictatorship” if the plans for economic government were pursued. And the new PM designate of Slovakia Iveta Radicova on Friday called the eurozone aid package “wrong, dangerous and the worst solution”, indicating that the country might not chip in after all.
The EU’s Gouvernement économique is far from being fait accompli.Open Europe blog team