Tag Archives: Eurozone

At the crossroads – How can Europe become a model for success again?

 

Recent visits by high-level guests (the Vice President, and the ministers for defense and the exterior) from D.C. to Europe were scrutinized as rarely a visit from the most important partner country has been before. Comments during and after the election campaign about NATO being ‘obsolete’, and the EU being ‘bound for a breakup’, in sync with welcoming anti-EU insurgents created an atmosphere of puzzlement.

As for defense matters, EU member state leaders suddenly rushed to assure their willingness to increase defense budgets to (a long ago agreed) 2% of their respective GDP, maybe until 2024. But they also started to get involved in number games – don’t we also have to consider development aid, expenses for refugees, or costs for stabilizing currencies? The guests from overseas were not visibly impressed. As for the EU, which this year faces up to four crucial elections (Netherlands, France, Germany, possibly Italy), ‘mainstream’ leaders (one of the populist battle cries) continued to borrow some topics from the populist activists: unaccepted refugee candidates shall be returned quicker, austerity policies should give way to state-sponsored spending for infrastructure, social niceties, etc.

Yes, the EU is undergoing its most serious crisis after it was created about 60 years ago, but it also remains a success story. The question is: what are Europe’s options for not just surviving, but regaining momentum and initiative?

– Klaus Segbers

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Is Europe losing its guiding principles? Is Europe on a course to being fragmented?

Over the last decades, Europe was overwhelmingly considered as a success story – and rightly so. Sure, there were debates and problems, but not on core matters. On the contrary: the end of the east-west conflict, different rounds of enlargement, and the introduction of the Euro established the perception of an ongoing strengthening of Europe. This seems to now be coming to an end.

There are at least four crises where Europe is stumbling: first, the ongoing euro crisis. The referendum in Greece is irrelevant here. When the Greeks do not want to be humiliated, they are free to live by themselves. But the inability of the European agencies to accept their own rules, without bending them, is worrying.

Second, the apparent helplessness regarding waves of migrants moving toward Europe from Africa. Short-term assistance and mid-term signals are confused, and there is no coherent European response. Thirdly, the wavering positions toward an aggressive Russia. The only helpful response – a clear communication of red lines and their enforcement – is missing.

And fourthly, an unconvincing whining about continuing and clear violations of rules and standards by American spy agencies being active in Europe. Because the American nerve will listen to European concerns, a much higher European independence from the US would be the only solution.

In all these cases, the core problem is a confused (or missing) European signalling.

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25 years after the fall of the Berlin Wall – is the world better or worse off with the united Germany?

When Germany’s neighbors – France, UK, Italy, Poland, and the Baltic states – faced the prospect of a unified Germany in 1990, many reservations could be registered. Experiences with a “big Germany” were only 45 years in the past. Margaret Thatcher, Francois Mitterand, and others were very open in their rejection of a unified Germany. Scientists like John Mearsheimer predicted a nuclearization of a unified Germany. Nothing of this sort materialized. But – Germany is not just a, but the core member of the Eurozone and the EU. Germany has a place at the Iran negotiations, and is also active in the Near and Middle East diplomacies. Also, it has its
troops deployed to keep peace or stability in plenty of global crises. There is no Western politician so much in demand in both Ukraine and Russia. On balance – how do we see Germany’s global role today?

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In a world economy where all BRICS are weak or weakening, where Japan is combating its crisis, and only the U.S. has significant growth rates, the weakness of the Eurozone is worrying. What should be done?

The new EU Commission finds itself in the middle of a shooting-out between two increasingly outspoken camps: Should growth be stimulated by quantitative easing, and by state-induced spending programs? Or should austerity policy be continued, accompanied by structural reform in the southern EU countries? This is indeed a question that indicates a divide – mostly between Germany, Finland and the Baltic countries in the second groups, and most of the others in the first. The problems of France and Italy to push their budget deficits below the 3 per cent limit of annual debt against GDP. The southern governments not only encourage themselves, but also Germany to increase spending, forget about balancing the budget (to be reached in Germany in 2015 for the first time in decades), and instead start spending and investing into infrastructure and other goodies. A related fight is going on in the ECB, where a majority supports the line of Mario Draghi to do “whatever it costs” to save the Euro, against some other central bank governors criticizing the lax attitude of the ECB, buying very questionable state bonds ignoring their market value.

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