EU Commission should be more daring

You ask EU Economic Affairs Commissioner Olli Rehn and his team what is the solution for country A or B or C to return to growth and you always get the same prescription. They seem to know only one mantra. It has three lines: augment your exports; lower your labour costs; cut your public debt.

I wonder.

If every EU should boost its exports, where are the import markets?

How far should one lower the labour costs to be competitive with China or Bangladesh?

Why should we cut public debt so dramatically at a time of recession? Why can’t we get the European Central Bank’s statutes changed in order for it to be able to do some quantitative easing? Is Rehn afraid of saying that because he does not wish to offend Berlin?

The point here is very simple. We expect the EU Commission to tell the citizens of Europe what should be done effectively, together and on a country by country basis. They at the Commission are paid to produce an independent advice.

Then, Berlin, The Hague, and other capitals and their national politicians will respond if, yes or no, they want to do it.

A Commission that only recommends what the EU political masters want to hear is useless.  

The finance moralist is a failed politician

Jeroen Dijsselbloem might not know where Bangui is located. Most likely, he had also no idea up to recently where Nicosia is. But like the Séléka rebels in the Central African Republic, he managed today to create chaos and uncertainty. His interview with Reuters and the Financial Times shows that he has the same level of political tact and experience as the leaders of Séléka. And he managed to do what the CAR rebels are very good at: to divide what should be united. They split the country along ethnic lines, a tradition in that part of the world. Djisselbloem split Europe, separating the good people of the parsimonious North from the prodigal boys from the South. And undermining bank recovery in the lands of such bad boys.

Then, later in the day, maybe after a serious caning by Angela, the man said that his words about the Cyprus programme being a template for future financial crisis were not meant to mean what they indeed mean, as each country situation is a special case.

He is the one that could be considered a special case.

Maybe the UN – at a time when its presence in Bangui is being seriously challenged –should consider sending him as an envoy to CAR. The country is at least a safe place for the markets as there is no Reuters or Financial Times correspondent around. 

The cluster bomb

The EU decision on Cyprus has had the same effect as a cluster bomb. It has hurt the little credit and confidence that the European citizens still placed on the Union’s leaders. It has hurt Germany’s relations with the South of Europe a lot more. It has hurt further the trust on the banking system. It destroyed value in the all the stock markets. It undermined potential capital investments in Portugal, Spain, Greece and Italy. And it has shown, now that there seems to be some backtracking, that the EU takes critical decisions without looking at all the dimensions and implications of the matters under review. And so on.

A very effective cluster idiocy indeed.

Jeroen Dijsselbloem’s name will remain associated to this inept decision. Besides being the Finance Minister of the Netherlands, he is the President of the Eurogroup, the platform that brings together the EU Finance Ministers. Dijsselbloem took over from Jean-Claude Juncker in January 2013. Juncker, notwithstanding the fact that he comes from a very small country –Luxembourg – managed to demonstrate a strong sense of independence and objectivity. He was his own man and also a firm believer in the common project. The new fellow seems to be biased towards Northern European positions, very close to Angela Merkel’s views and be inspired by a moralistic approach to the issue of public deficits. He believes that the citizens in the crisis countries should be punished for the many years of incautious spending. This is exactly the kind of approach that can make the on-going EU cohesion crisis much worse.