Monthly Archives: July 2010

Poor old Turkey has been getting mixed messages from European governments again, after visits by Britain’s David Cameron and Germany’s foreign minister, Guido Westerwelle, this week.

The UK prime minister was very outspoken in his support for Turkish membership of the European Union. “I will remain your strongest possible advocate for EU membership,” he said. “Together I want us to pave the road from Ankara to Brussels.”

It was familiar British policy, but spelt out with unusual passion, and very few cautionary words. Praising Turkey’s contributions as a Nato ally (no mention of Ankara’s tiresome blocking of Nato-EU co-operation on security issues), Mr Cameron declared: “It’s just wrong to say Turkey can guard the camp but not be allowed to sit inside the tent.”

Turkish media seized on some of the most flattering comments from Mr Cameron. “Our golden age” was the headline in the top-selling newspaper Hurriyet, while the Sabah daily blazoned its front page with “The EU would be poor without Turkey”. Read more

Any day now the advertisements should go out for the top jobs in Brussels’ new diplomatic service – the European External Action Service, as it will be boringly known.

If the optimists are right, the service will be anything but boring. It’s the most important single invention to come out of the Lisbon treaty, say the true believers. It will give the European Union the eyes and ears to forge a genuine foreign policy, and the voice to put it into effect.

On the other hand, eurosceptics are convinced it will just be a vast and expensive new bureaucracy, merely duplicating the role of national embassies. So the battle to keep its wings clipped may also be anything but boring.

The 27 member states sit somewhere in the middle – not quite sure they believe in what they are creating, wanting to keep it under control, and no doubt trying to do it all on a shoe-string. In the end, their attitude will determine if it’s a success or a failure. Read more

For better or worse, my time is up as Brussels bureau chief for the Financial Times, so this is my last post on this blog.  My successor, Peter Spiegel, will arrive in September.  I wish him, and all the readers and contributors to the Brussels Blog, the very best.

Leaving Brussels after three years feels rather like exiting an intensely gripping drama at the end of Act III instead of staying to the end.  The fate of Polonius in Hamlet comes to mind.  What was his sententious advice to his son?  ”Neither a borrower nor a lender be/ For loan oft loses both itself and friend/ And borrowing dulls the edge of husbandry.”  Now there’s something for Angela Merkel and George Papandreou to chew on.

In Brussels there are days when you feel the European Union is a magnificent creation, one of the most inspired experiments in mankind’s history.  Then there are days when you feel disgusted by the pettiness, the short-sightedness, the incoherence of it all.  As followers of this blog will know, I count myself a European in heart and soul and I desperately want the EU to succeed. Read more

Reforming the management of economic policy, primarily in the eurozone but also in the European Union as a whole, is without question one of Europe’s highest priorities.  Few steps would do more to raise the EU’s credibility with the US, China and the rest of the world than concerted action to improve European economic performance and make the euro area function more efficiently as a unit.  Much of this comes under the heading of “economic governance”. But the difficulty is that it is not always easy to figure out which Europeans are in charge of the process.

On Monday Herman Van Rompuy, the EU’s full-time president, chaired the latest meeting of a task force on economic governance that he was chosen last March to lead.  The task force, consisting largely of EU finance ministers, came up with various sensible ideas on tightening sanctions (financial and non-financial) on countries that break European fiscal rules.  Task force members also want to strengthen the monitoring of macroeconomic imbalances, such as the gap between large current account surpluses in Germany and deficits in southern Europe. Read more

Christian Wulff, Germany’s new federal president, has not been idle. He had barely wiped his feet on the doormat in Schloss Bellevue, his splendid new Berlin residence, before setting off on a foreign trip.

While his job is without power, it carries lots of prestige. Indeed, the role is more about symbolism than substance. But the symbolism matters.

His first stop on Wednesday was in Strasbourg to meet Jerzy Buzek, European Parliament president. Second stop was Paris, for a chat with Nicolas Sarkozy at the Elysée palace. And third stop, on Thursday, was Brussels, where he had lined up Herman Van Rompuy, president of the European Council, José Manuel Barroso, president of the European Commission, and Anders Fogh Rasmussen, Nato secretary-general.

It was all about pouring oil on troubled waters, to be sure. Germany’s relationship to the European Union has seldom caused so much anxiety amongst its neighbours, since Berlin started to bang the drum with a vengeance about the need for fiscal discipline – first in Greece, and now in the rest of the eurozone. Read more

Raising the retirement age and cutting back pension entitlements are possibly the most unpopular measures that any modern European government can take for the purpose of stabilising the public finances.  From an individual’s point of view, the advantages seem remote or non-existent and the disadvantages all too immediate.  From the point of view of a ruling political party seeking re-election, it’s much the same story.  This explains why there is growing interest among European Union policymakers in the idea of “de-politicising” the pensions issue, by making certain changes to pension systems automatic and not subject to endless, acrimonious political struggles.

Take a Green Paper published today by the European Commission.  A Green Paper is a document designed to stimulate public discussion, not make firm policy proposals, so the Commission steers a cautious path through the issues.  Nonetheless, it observes in one passage: “A number of member-states have demonstrated that a promising policy option for strengthening the sustainability of pension systems is an automatic adjustment that increases the pensionable age in line with future gains in life expectancy.” Read more

Financial commentators, like financial markets, move in herds.  Is the herd wrong about Greece?

The herd takes the view that Greece will sooner or later have to restructure its debt.  According to herd thinking, the €110bn rescue plan arranged for Greece by its eurozone partners and the International Monetary Fund merely buys some time for the Greek government – and for its European bank creditors.  The herd predicts a “haircut”, or loss, for Greek bondholders of 30 to 50 per cent of the face value of their bonds.  All this is likely to happen towards the end of 2011 or in early 2012, says the herd. Read more

Since the start of this year, Europe’s financial crisis has been given many labels - a sovereign debt crisis, a banking sector crisis, a crisis of the euro itself.  But rarely is it asked whether the European Union’s single market, which is the foundation stone of EU integration in the modern era, is under serious threat.

One person who has asked this question is Mario Monti, the distinguished former EU commissioner for the internal market and competition policy.  In May he presented a report on how to reinvigorate the single market to Commission president José Manuel Barroso, who had commissioned it from him last year.  It delivered a blunt message.  Many Europeans – citizens as well as political leaders – looked at the single market with “suspicion, fear and sometimes open hostility”, Monti said.  “The single market today is less popular than ever, while Europe needs it more than ever.” Read more