Monthly Archives: February 2010

At last week’s European Union summit in Brussels, most people were so focused on the Greek debt crisis that they missed an interesting development on the sidelines.  This was an informal proposal from Herman Van Rompuy, the EU’s full-time president, to convene summits of EU heads of state and government once a month.

It would be a significant departure from the way the EU conducts its affairs.  At present the EU holds four scheduled summits a year, usually in March, June, October and December.  Since the financial crisis erupted in 2007-08, there have been various emergency summits as well.  President Nicolas Sarkozy of France, who ran the EU’s rotating presidency in the second half of 2008, holds the record for calling unscheduled summits.  Apart from those dealing with the financial crisis, he also convened one in response to Russia’s war with Georgia.  

Greece

The political constraints of the eurozone (Wolfgang Münchau, FT) 

Since the Fifth Republic’s birth in 1958, France has had six presidents – and only one, François Mitterrand (1981-1995), was a man of the left.  Now certain elements of the French left see a great opportunity to capture the presidency again by selecting Dominique Strauss-Kahn, the International Monetary Fund’s director-general, as their candidate to run against Nicolas Sarkozy in the 2012 election.

I saw Strauss-Kahn, or “DSK”, in action in October 1998 when, as France’s finance minister, he travelled to Saarbrücken, capital of the tiny German state of Saarland, for a meeting with Oskar Lafontaine, his left-wing German opposite number.  Back then, the big economic story in Europe was what many people saw as an effort by Lafontaine and Strauss-Kahn to push for politically managed exchange rates and thus, supposedly, to curb the European Central Bank’s independence on the eve of the euro’s introduction.  The fuss over this was quite out of proportion to what the two ministers had in mind, let alone what they were capable of delivering.  Lafontaine didn’t last even one year as German finance minister. 

Today’s European Union summit in Brussels will set out the framework for a financial rescue operation for Greece.  This much is clear is from various briefings being given by officials from countries as varied as Austria, Lithuania, Poland and Spain.  But financial markets will have to wait until next week to see the full details of the plan.

The central question is how far Germany has been pushed to swallow its words and offer help for Greece, after weeks of denying that it would do anything of the sort.  Only this morning Otmar Issing, the German former chief economist of the European Central Bank, was telling German television viewers that Greeks enjoyed “one of the most luxurious pensions systems in the world” and it was unreasonable to expect German taxpayers to fund it. 

From ft.com:

Hopes for Greek lifeline eases nerves (Jamie Chisolm) 

Hugh Williamson, the FT’s Europe news editor, reports from Athens. 

The Crann nanotechnology research centre in Dublin is an example of the EU’s Lisbon agenda, which 10 years ago set out to make Europe the world’s most dynamic knowledge-based economy. But how well have those ambitions been met? Can Europe compete with the US? And how realistic are the EU’s R&D targets? John Murray Brown reports from Dublin. 

An unambiguous message of solidarity among eurozone states will come from Thursday’s European Union summit in Brussels, but it is still unclear if this will translate into a specific financial rescue plan for Greece.  Debate among governments is continuing.  However, expectations in financial markets have been raised so high over the past 24 hours, what with European Central Bank president Jean-Claude Trichet flying in for the summit from Sydney and officials in Berlin hinting at a German-led rescue, that it would be risky for the EU leaders not to commit themselves to some sort of initiative.

There are various possibilities: bilateral loans from Germany and France, with perhaps Italy and the Netherlands chipping in; an International Monetary Fund-style standby facility, organised among the 16 eurozone countries; or an EU-wide loan, involving a show of support from all 27 member-states.  It is quite likely that the IMF will be asked to continue providing Greece with expert technical advice, but I don’t think the eurozone countries will go further and call on IMF financial resources.  Apart from anything else, there is a fear that the US may raise objections on the grounds that the IMF’s firepower should be reserved for fighting emergencies not in prosperous Europe but in other, more disadvantaged financial hotspots. 

Greece and the Eurozone: Halcyon no more (Ralph Atkins and Kerin Hope, FT)

French language losing its cachet? Au contraire! (Harvey Morris and Stanley Pignal, FT) 

Europe’s leaders are getting radical.  On Thursday the presidents, prime ministers and chancellors of the European Union will meet for a day of economic policy discussions in Brussels – but not in their normal location, the marble-and-glass Council of Ministers building, famous for its charmless, disinfected atmosphere and its 24km of headache-inducing corridors.  No, this time they will get together in a nearby building called the Bibliothèque Solvay, which is a pleasant old library rented out for dinners and receptions.

The switch of location was the brainwave of Herman Van Rompuy, the EU’s first full-time president, who thought it would encourage a more creative, informal exchange of views.  He has introduced another innovation: each leader is to be restricted to just one adviser at the talks.  This isn’t a problem for countries with leaders who are masters of economic policy detail.  But others are less happy about the arrangement.  It is whispered that the Italians are swallowing especially hard, wondering what on earth Prime Minister Silvio Berlusconi will say once he’s on his own.