I know I could always be good
To one who'll watch over me...
As we know, the somewhat harrowing experience Germany is now experiencing of imposing discipline on wayward EMU members has compelled it to create additional surveillance mechanisms to (hopefully) prevent future repeats. However, doing so is easier said than done. While some left-of-centre commentators welcome the establishment of a European Monetary Fund (EMF) as a way to ward off globalization's pantomime villains--"the speculators"--the reality is more complex and involves some rather unpalatable considerations. As Pogo said, we've met the enemy and it is us [Europeans].
First, the Bundesbank is already the template for ECB; establishment of an EMF would further emphasize Deutschland uber alles (Germany above all) in the European project's economic sphere. That is, Germany would be acting as "the big affair I cannot forget" to get its long-desired wish for tighter watch over happy-go-lucky states.
Second, and this is the big political question, is that creating economic and fiscal discipline enforcement mechanisms at German insistence will likely require more treaty revisions and, consequently, more referenda. By now, Europeans are rather tired of having to decide on another treaty after Maastricht (1993), Amsterdam (1999), Nice (2003), and Lisbon (2009). And, don't forget the ill-fated European constitution that necessitated Lisbon: the French (45/55) and Dutch (39/61) rejected the European Constitution during referenda held in 2005. Moreover, the Lisbon Treaty required making Irish re-vote for approval.
The Financial Times recently had an article speaking about these challenges as Germany aims to persuade the others to tack on a surveillance mechanism to the EU. So far, the Finns are indicating support:
Finland is sympathetic to controversial German proposals for a fresh European Union treaty if necessary to enforce fiscal and economic discipline in the eurozone after the Greek debt crisis. Matti Vanhanen, prime minister, acknowledged that treaty changes would be “very sensitive” so soon after the EU’s latest rule book came into force last year after nearly a decade of gruelling debate. But he said Finland was “ready” to back proposals by Angela Merkel, German chancellor, to strengthen economic co-operation within the eurozone and impose sanctions against countries that threaten its stability.So, can stability and growth pact (SGP) provisions concerning the sanctioning of repeat offenders--which Germany itself has been one of at various points in time--be made more forceful? More importantly, do member countries have the appetite for yet another round of treaty revisions? Venhanen makes the very valid point that many EMU aspirants have striven to meet membership criteria amid a global recession. Implicitly, those already in the project should not shirk their responsibilities as many are very keen on joining this club:
The prospect of another round of treaty negotiations has caused alarm in many European capitals after the difficulty of forcing through the Lisbon treaty but Mr Vanhanen’s remarks indicate that Germany is starting to win allies. He said the priority should be to look for ways to tighten rules within the existing treaty, including the withdrawal of EU structural funds from countries that ignore official warnings from Brussels over excessive budget deficits.
Such a measure could be introduced “very quickly” using the present framework, he said, while treaty changes were likely to take “several years”. “We need an instrument that will guarantee that, after a warning, member states really change their fiscal policies,” he said. “I think we can do it without changing treaties but we are also ready for treaty changes if it would produce something better.”
Mr Vanhanen said the eurozone must restore its credibility as a “rules-based” union by tackling soaring deficits that have left almost every member, including Finland, in breach of the stability and growth pact, which was supposed to limit deficits to 3 per cent of gross domestic product.
His comments came amid the most serious crisis in the euro’s 11-year history, with Greece on the brink of a bail-out from the International Monetary Fund and fellow eurozone countries. “Greek debt is not so big but there is a domino threat so we need to isolate the problem as early as possible,” said Mr Vanhanen.
He insisted the crisis must not be allowed to disrupt plans by Estonia to join the euro next January and said the eurozone must keep its doors open to aspirant members. The European Commission and European Central Bank are expected to consider Estonia’s readiness to join next month with a final decision from the European Council due in summer.The show must go on even if the script may need modification to the consternation of the actors. Tell me, where is the shepherd for this lost lamb?
The Baltic country, a near neighbour of Finland, appears to have met all the criteria for membership. It battled to reduce its deficit below 3 per cent of GDP amid one of the deepest recessions in the EU last year.
Some analysts have questioned whether the eurozone has the appetite for further expansion after the Greek crisis but Mr Vanhanen said Estonia’s application seemed to be moving ahead “on timetable”. He warned that any delay would “send totally the wrong message” to other aspirant members, such as Latvia and Lithuania, which are making tough budget cuts and other reforms to keep alive hopes of euro entry.
Although he may not be the man
Some girls think of as handsome
To my heart he carries the key...