German Shock Solution: Goodbye Sovereignty for EU Problem States
Posted July 30, 2011on:
In an interview with Stern, German Finance Minister Wolfgang Schäuble suggested that any country that receives a bailout must give up some sovereignty, saying, “A state with problems, that receives help, must be willing to give some of its sovereign rights to the EU.”
According to a letter seen by Reuters, Schäuble also suggested that the German government would not support a carte blanche for bond purchases via the eurozone’s temporary bailout fund, the EFSF. His comments will add to investors’ growing scepticism over the speed and scale at which the EFSF can purchase government bonds, since it requires unanimous consent of eurozone members and the ECB. Schäuble’s comments also appear to have caused Spanish and Italian borrowing costs to rise this morning.
Meanwhile, the WSJ reports that leading Portuguese banks are pushing for changes to the aid they receive under the Portuguese bailout. They suggest that the €12bn currently earmarked for bank recapitalisation should be used by the state to repay its debt with the domestic banking sector, which would make it easier for banks to increase lending in the wider economy and therefore promote economic growth.
Head of the IMF, Christine Lagarde, has suggested that the IMF may need to increase its financial resources again to ensure it can deal with financial crises around the world, saying, “Maybe [the IMF] could do with more [financial resources]. In the not-too-distant future, we will probably have to revisit this issue.” Despite having a resource base of $1.5tr the IMF can only lend up to $396bn in the next year, given existing loans and delays in countries providing their cash quotas. Separately, Moody’s has downgraded Cyprus this morning to just above junk status, citing its exposure to the Greek crisis as part of the reason.
Conservative Home’s “think tank growth manifesto” cites Open Europe arguing that, “The Government needs to push for a long-term solution to the eurozone debt crisis – bailouts aren’t working, debt restructuring will be needed…the UK needs to seek allies in pushing for a better-functioning single market and protecting the interests of the City of London.”
On Conservative Home, Anthony Browne, former Brussels correspondent for the Times and policy advisor to Boris Johnson, agues that “European localism should be our guiding principle behind our approach to the EU.” He adds that, “The debate should not be about being for or against the EU; but which powers are held at what level.”
Conservative Home: Browne
José María Aznar: “A European finance ministry is not the panacea that will solve all these problems”
Writing in the Times, former Spanish Prime Minister José María Aznar argues “To save the euro, stop smashing the club rules…A European finance ministry is not the panacea that will solve all these problems. Nor will tighter fiscal union be the solution. The solution is to rediscover and respect the original regulations of the euro and to liberalise Europe’s economies. If instead the eurozone evolves towards a transfer system that perpetuates subsidies, we will be buying stability at the expense of growth”.
Writing in the WSJ, columnist Paul Hannon argues, “The reluctance of member governments to increase the size of the [eurozone bailout] fund therefore sends two pretty damaging messages: first, that they think it is reasonably likely a member of the bloc won’t be able to repay them; and second, that they aren’t prepared to stand together to get through the fiscal emergency, come what may”.
FT: Soros FT: Kay WSJ: Hannon Times: Aznar Mail: Synon Mail: Alexander Zeit: Stiglitz Zeit: Hishow Il Sole 24 Ore: Cerretelli
Following last week’s massacre in Norway, Euractiv France suggests that the EU may revive the idea of an internet surveillance system to monitor the radicalization of extreme views.
EurActiv Fr Spiegel
The FT reports that the President of American Airlines, Tom Horton, has called the European Commission’s proposal to include all airlines flying into the EU in its Emissions Trading Scheme “unwise”.
The Commission has announced that sales of meat and fish must adhere to new EU labeling rules by 2015, with labels stating if products have a water content of above 5% of the weight.
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