Europe’s volcanic ash crisis is just a drag

April 19, 2010 3:05 pm by Tony Barber

Europe’s volcanic ash emergency is, if I may say so, a lot of hot air rather than a genuine threat to the economy. It means that a couple of million people failed to show up at work on Monday - but so what? To us Europeans, there’s nothing so unusual about that.

After all, the Icelandic volcano erupted at the fag end of Europe’s astonishingly long Easter break – a luxurious stretch of two and a half weeks, no less. When you get holidays as long as that, the temptation to stay away from work on the first Monday back, and inhale one more time on Europe’s opiate way of life, can be pretty strong.

True, some business sectors and some parts of the world are suffering more than others. An exporters’ association in Kenya reports that 5,000 workers in the nation’s cut flower business have been laid off because of the ban on flights to Europe. But the air transport industry accounts for less than 1 per cent of goods transported through Europe, compared with 46 per cent for roads, 37 per cent for seas and 11 per cent for railways. The airline industry is squealing for financial help, and the European Commission seems sympathetic, but airlines are more the little toe than the backbone of European economic output.

All in all, there is scant prospect that the volcanic ash cloud is going to smother Europe’s economic recovery. At present the post-financial crisis European economy resembles one of those cigarettes that keeps glowing in spite of three or four attempts to stub it out.

I may be wrong, of course. But one person who could set me straight – Lucas Papademos, the European Central Bank vice-president – was unable to do so on Monday because the ash cloud prevented him from travelling to the European Parliament in Strasbourg to deliver the ECB’s annual report.

Undoubtedly, if you are a British or Dutch citizen with an Icesave account that went up in smoke, you would prefer Iceland to have sent you cash instead of ash. But the bottom line is that this is one explosion that won’t seriously damage your health or that of your country – in short, it’s just a drag.

Tags: European economic recovery, volcanic ash crisis
Posted in EU Parliament | Permalink

When a Greek rescue plan is not a rescue plan, after all

March 16, 2010 9:39 am by Tony Barber

The financial rescue plan devised by eurozone governments for Greece doesn’t look like a rescue plan in the classic sense. Like a thermonuclear weapon, it appears intended never to be used at all. The idea is that the Greek government itself, backed by calmer financial markets, will succeed in overcoming its debt crisis without ever drawing on assistance from its 15 euro area partners.

Continue reading: “When a Greek rescue plan is not a rescue plan, after all”

Tags: EU fiscal policy, Euro, European monetary union, Germany, Greece
Posted in Euro | Permalink

Don’t waste the golden chance of the EU’s diplomatic service

March 15, 2010 8:55 am by Tony Barber

Setting up the European Union’s new diplomatic service was never going to be easy. Turf wars between the EU’s 27 member-states and the European Commission were inevitable, and the ever meddlesome European Parliament was certainly not going to pass up an opportunity to stick its oar in. But if the EU doesn’t get this right, the world’s other big powers will never be convinced that the Europeans are serious about operating a coherent common foreign policy.

Continue reading: “Don’t waste the golden chance of the EU’s diplomatic service”

Tags: Balkans, Catherine Ashton, EU foreign policy, EU foreign policy high representative, Turkey, Ukraine
Posted in Foreign policy | Permalink

German ambiguities underlie confusion over EU monetary fund

March 11, 2010 7:10 am by Tony Barber

The European Union is often derided for policy confusion and speaking with a multitude of voices – but sometimes it’s not the EU’s fault, it’s the fault of one of the member-states. Take the idea of setting up a European Monetary Fund. This emerged as a serious possibility for the first time when Wolfgang Schäuble, Germany’s finance minister, offered support for it in an interview last weekend with Welt am Sonntag.

Within a couple of days, however, Germany’s two most important central bankers – Axel Weber, the Bundesbank president, and Jürgen Stark, an executive board member of the European Central Bank – had distanced themselves from the idea. Even more confusingly, Chancellor Angela Merkel chipped in with the remark that it wouldn’t be possible to set up a European Monetary Fund without changes to the EU’s governing treaty. As she well knows, after the agonising experiences first with the EU’s failed constitutional treaty and then with the Lisbon treaty (which finally came into force in December), there is next to no appetite for such changes among the EU’s 27 governments.

Continue reading: “German ambiguities underlie confusion over EU monetary fund”

Tags: Angela Merkel, European Central Bank, European Monetary Fund, France, Germany
Posted in Euro | Permalink

The crude stains on the tapestry of European integration

March 9, 2010 12:41 pm by Tony Barber

I take it that everyone has seen the insulting picture on the cover of the February 22 edition of Focus, a lightweight German news magazine? Under the headline ”Swindlers in the euro family”, it shows the Venus de Milo statue, a monument of ancient Greek civilisation, sticking up a middle finger at Germany. In this way the magazine’s editors convey, as offensively as possible, the idea that debt-ridden Greece is robbing Germany blind by forcing it to come to Greece’s financial rescue.

The Greek response has been predictably furious. The Greek consumers’ federation has called for a boycott of German goods, commenting that Greeks were creating timeless works of art like the Venus de Milo at a time when Germans were “eating bananas in the trees”.

Continue reading: “The crude stains on the tapestry of European integration”

Tags: Britain, debt crisis, Euro, European monetary union, Germany, Greece, Günter Grass, Italy, national insults
Posted in Euro | Permalink

Raising Europe’s Economic Growth Rates: An Elusive Target

March 7, 2010 4:52 pm by Tony Barber

The European Union needs to raise its economic growth potential – on that, at least, the bloc’s 27 member-states and the European Commission agree. Otherwise Europe risks a speedy descent into relative economic decline, and its cherished “social model” – combining a liberal market economy with cradle-to-grave public services – will be increasingly unaffordable. Will the Commission’s latest proposals, published last week under the title “Europe 2020: A European strategy for smart, sustainable and inclusive growth”, do the trick?

Continue reading: “Raising Europe’s Economic Growth Rates: An Elusive Target”

Tags: EU economic policy, Europe 2020, European economic model, Lisbon Agenda
Posted in EU, EU Commission | Permalink

Impressive Van Rompuy speech sets out Europe’s challenges

March 1, 2010 9:28 am by Tony Barber

The most important speech delivered in Europe last week came from Herman Van Rompuy, the European Union’s full-time president. It had real depth and did not try to conceal the EU’s problems behind a mask of unconvincing optimism.

The speech addressed how to strengthen Europe’s role in a world in which the Old Continent appears in danger of slipping into faster relative decline unless it gets its act together. The speech had much to say about economic policy, but it was the foreign policy content that was more original. This was Van Rompuy’s first detailed exposition of his views on the subject.

Continue reading: “Impressive Van Rompuy speech sets out Europe’s challenges”

Tags: EU economic policy, EU foreign policy, European Union's future, Herman Van Rompuy, US relations, Van Rompuy
Posted in EU, Foreign policy | Permalink

EU-Israeli relations set to stay warm in spite of Dubai killing

February 23, 2010 2:01 pm by Tony Barber

Nothing illustrates the sensitivity of the European Union’s relationship with Israel better than the statement which EU foreign ministers issued on Monday complaining about the use of forged European passports in last month’s killing of Mahmoud al-Mabhouh, the Hamas commander, in Dubai. The statement contained several sentences that were masterpieces of waffle, such as the following: “The EU … believes that its passports remain among the most secure in the world, fully meeting all international standards.”

The statement was, however, remarkable chiefly for its reluctance to spell out that the EU holds Israel responsible for the flagrant misuse of identity documents belonging to European citizens. It could hardly be otherwise, of course. There is insufficient evidence at this stage to state with certainty that Israel’s agents used the false passports and killed Mabhouh. Instead, it was left to a couple of EU foreign ministers to conduct some finger-wagging in one-on-one meetings with Avigdor Lieberman, their combative Israeli counterpart, who just happened to be in Brussels on Monday.

Continue reading: “EU-Israeli relations set to stay warm in spite of Dubai killing”

Tags: EU foreign policy, France, Germany, Hamas, Israel, Italy, Mahmoud al-Mabhouh, Middle East
Posted in EU, Foreign policy | Permalink

Spain, spooks and the phantom anti-euro conspirators

February 21, 2010 1:11 pm by Tony Barber

You know that the European Union is in trouble when Russia offers more intelligent advice on the eurozone’s debt crisis than Spain, the country that holds the EU’s rotating presidency. Dmitry Medvedev, Russia’s president, disclosed the other day that he had recommended to George Papandreou, Greece’s prime minister, that the Greek government should request assistance from the International Monetary Fund to sort out its problems.

This is exactly the course of action advocated by several non-eurozone EU countries as well as a host of distinguished economists and, dare I say it, the editorial writers of the Financial Times. As it happens, I don’t agree – if by IMF assistance we mean financial help. The IMF will be involved, along with the European Central Bank, the European Commission and eurozone finance ministers, in monitoring Greece’s public finances and providing technical aid as required.

But anything more than that strikes me as unnecessary. I take very seriously the argument that IMF financial assistance for Greece would plant suspicions in the minds of investors around the world about the long-term viability of European monetary union. If emergency aid were essential, it would not be difficult for Germany, France and other eurozone countries to provide the required amount, which is generally estimated to be about €20bn. To turn to the IMF would raise doubts that the very foundations of European monetary union were built on sand.

Be that as it may, Medvedev’s advice is much more sensible than the Spanish government’s apparent initiative to set its secret services on a hunt for conspirators in financial markets and “the Anglo-Saxon media”, who are supposedly out to destabilise the eurozone. There is probably far less to this alleged counter-espionage operation than we are led to believe. But there is little doubt that some Spanish ministers see an opportunity to deflect attention from the shortcomings of their economic policies by attacking the English-language media.

One can see how the temptation arises. When I was in Madrid last month for various events marking the start of Spain’s six-month EU presidency, José Luis Rodríguez Zapatero, Spain’s prime minister, spent an hour or so with a group of Brussels-based reporters. One of them, an English-language reporter for Reuters, put a blunt question to Zapatero: “Is Spain the next Greece?”

Boy, did he not like that. The expression on his face reminded me of William Golding’s description of Jack, the former choirboy who turns into a savage in Lord of the Flies, when he kills his first pig. Well, the question was a touch inflammatory. Spain isn’t the next Greece. It has an unemployment rate verging on 20 per cent, a yawning budget deficit and a hangover from a burst construction industry bubble. But it doesn’t suffer from Greece’s basic problem – a severe lack of credibility, accumulated over many years, with its eurozone partners and the markets.

That said, it is the responsibility of political leaders to ignore media pinpricks and get on with their job of managing the economy. Raising a hue and cry in pursuit of phantom foreign conspirators is unworthy of a serious government.

Tags: Dmitry Medvedev, Euro, European monetary union, Financial crisis, Greece, IMF, Russia, Spain, Zapatero
Posted in EU, Euro | Permalink

Coming Up Soon… Mr Barroso’s Man Goes to Washington

February 18, 2010 9:03 am by Tony Barber

Two thoughts spring to mind when you consider the appointment of João Vale de Almeida, a Portuguese Eurocrat, as the European Union’s next ambassador to the US. The first is that the EU seems to be retreating from its experiment of placing a political heavyweight in Washington to speak up for Europe. John Bruton, the EU’s outgoing envoy, is a former Irish prime minister whose face was well-known in the White House and on Capitol Hill when he got the job in 2004.

Vale de Almeida is familiar to certain US officials – he has been the European Commission’s top liaison man for G8 and G20 meetings. But as a civil servant who started his career with the Commission in Lisbon back in 1982, he has never been elected to office, has never served as a government minister and altogether lacks the profile of someone like Bruton. Americans are already struggling to recall which two figures were chosen last year as the EU’s first full-time president and new head of foreign policy. Now they have a third obscure European name to remember.

The second thought is that Almeida’s main qualification for the US post appears to be that he spent five years from 2004 to 2009 as chief of staff for José Manuel Barroso, the European Commission president, who is also Portuguese. This has profound implications for the way the EU’s new foreign policy structures, as established under the Lisbon treaty, will be seen in Washington.

The treaty foresees that all EU missions abroad will form part of a diplomatic service answerable to Baroness Catherine Ashton, the newly appointed foreign policy high representative for the 27-nation bloc. Given Vale de Almeida’s close ties with Barroso, however, it will be entirely understandable if US policymakers see him as a channel for communicating with the Commission president as much as a servant of Ashton.

This perception is reinforced by the fact that Barroso has engineered Vale de Almeida’s appointment by exploiting his powers as Commission president in the interval before the EU’s diplomatic service is up and running. EU national governments didn’t get much of a say in the matter, either. Once the diplomatic service is operating in earnest, it will be Ashton’s job to choose ambassadors.

True, it can be argued that it was important to put a new envoy in Washington as soon as possible and Vale de Almeida had the right profile as the Commission’s director-general for external relations. But he has only held that job for a couple of months. Vale de Almeida’s appointment sends a signal that institutional rivalries and personal power plays will continue to hinder the formation of a united, more forceful, more coherent EU foreign policy.

Tags: Ashton, Barroso, EU foreign policy, EU-US relations, US relations
Posted in EU Commission, Foreign policy | Permalink