Once again, I attended a small dinner of “friends of Europe”. We enjoyed a lively discussion of a number of recent and prospective policy decisions. And, again, we had a series of votes.
Here are the questions and the results of the votes. (Not everybody voted on all issues.) The answers suggest, most significantly, continued informed nervousness about the future of the eurozone, despite recent action by the ECB. Read more
A top adviser at the European Court of Justice has said that the European Central Bank’s crisis-fighting Outright Monetary Transactions programme falls within policy makers’ mandate.
Q: That’s pretty much a green light for quantitative easing next week isn’t it?
Most euro area governments and investors are breathing a sigh of relief after Wednesday’s preliminary judgment from the EU’s highest court in favour of the European Central Bank’s sovereign bond-buying programme – the 2012 initiative that helped to bring the euro crisis under control.
But governments and investors, in and outside Europe, should keep in mind that the danger of a bitter, protracted struggle over EU constitutional law will now go up. This would pit Germany against other power centres in the EU. Read more
Which of the eurozone’s 18 member states will be the weakest performing economy in 2015?
Italy, which has recorded no economic growth since 1999? Cyprus, which is still reeling from its financial sector collapse in 2012-13? Or some other hard-pressed southern European nation? No. In all probability, the sick man of the eurozone will be Finland.
The Finnish economy is in its third consecutive year of contraction. Any growth in 2015 will be not much bigger than a snowflake. The country will hold a general election in April. The question is whether the dark outlook will benefit The Finns, a populist-nationalist party which was known as the True Finns when it shocked Europe by coming third in the 2011 election with 19 per cent of the vote. Read more
Speaking on television earlier this year, Manuel Valls, the French prime minister, declared that his government’s budget would not be written to “satisfy Brussels”, adding – “We are a great nation . . . France is a sovereign country.”
The European Central Bank will today flesh out details of its plan to buy bundles of loans sliced and diced and repackaged into products known as asset-backed securities, alongside covered bonds.
With growth stuttering and inflation falling to a five-year low, some fuel for the eurozone’s recovery is much needed.
The ABS plan could provide it, freeing up space on banks’ balance sheets to spur lending to the region’s businesses and households.
Why is the ECB doing this now? Read more
By Gideon Rachman
At the beginning of the year, I gave a talk about “geopolitical risk” to a big conference of investors. I trotted briskly around the course: Russia, the Middle East, the South China Sea, the eurozone. Afterwards, I was having coffee with one of the other speakers, a celebrated private-equity investor, and asked him how much he thought about geopolitical risk.
The consensus, such as it is, on the eurozone crisis was neatly summed up on Monday by Hugo Dixon, author and editor at large of Reuters News: “The euro crisis is sleeping, not dead.”
What about the crisis in Greece? Over the past four to five years Europe, supported by the International Monetary Fund, has invested more time, effort and money in Greece than in any other struggling eurozone state. The aim is to reform a country so inefficiently governed, so riddled with corruption and so burdened with debt that it seemed, for certain spells in 2011 and 2012, to pose a threat to the eurozone’s survival.
So it seems reasonable to ask: if this time, effort and money have not changed Greece for the better, what has it all been for? Read more
As the televised brawls between Nick Clegg, the Liberal Democrat leader and deputy prime minister, and Nigel Farage, leader of the anti-EU Ukip party have recently shown, the quality of political discussion in Britain is rarely so low as when the topic in question is the European Union.
All the same, sanity and thoughtfulness on the EU issue can still be found in British public life. For this we should thank, among others, the House of Lords, the much misunderstood but invaluable upper house of parliament. Read more
♦ Farhan Bokhari speaks to those on the front line as the Taliban tightens its grip on Pakistan society.
♦ After annexing Crimea, Russia moves to carve up the spoils. Guy Chazan reports from Simferopol.
♦ Russia’s revanchism has to be stopped, even for Russia’s own sake, argues Martin Wolf.
♦ Putin’s well-trained, stealthy army is not like the feeble one that invaded Afghanistan, warns David Ignatius in The Washington Post.
Reuters’ Breaking Views asks whether the eurozone should heed Japan’s deflation lessons. Read more
Here is a startling prediction from the European Commission. In the absence of comprehensive economic reforms, living standards in the eurozone, relative to the US, will be lower in 2023 than they were in the mid-1960s.
This forecast, contained in the Commission’s latest quarterly report on the euro area economy, deserves to be displayed prominently on the wall of every president and prime minister’s office in Europe.
It is a sobering prediction for two reasons. First, it contrasts starkly with the comforting tales of economic recovery and financial market stability on which Europe’s leaders are congratulating themselves in these early weeks of 2014. Second, it raises profound questions about Europe’s relative weight in the world and, in particular, about its military alliance and economic partnership with the US. Read more
Critics of Germany’s actions in the eurozone debt and banking crisis often berate Angela Merkel, the Christian Democrat chancellor, for lacking a “vision” for Europe. Not me. I am with Helmut Schmidt, West Germany’s plain-spoken Social Democrat chancellor from 1974 to 1982, who once said that people who have visions should go and see a doctor.
What is the view of Mario Monti, the distinguished former European Union commissioner, who worked closely with Merkel during his 17-month spell as Italy’s prime minister from November 2011 until last April? Monti now chairs a committee on promoting a united Europe at the Berggruen Institute on Governance, a non-partisan think-tank headquartered in California. I contacted him earlier this week in Milan, and as usual his thoughts were perceptive and full of common sense (and quite long sentences). Read more
Judges of the German Constitutional Court (Matthias Hangst/Getty Images)
In the beginning, the eurozone crisis was a banking sector, private debt and government bond market emergency. Then economic recession, unemployment and welfare expenditure cuts took hold, propelling the growth of anti-EU, anti-establishment and anti-immigrant political movements. Now the eurozone crisis is acquiring a third dimension: one in which national constitutional courts are moving to centre stage.
True, the judges sitting on Germany’s constitutional court have been going in this direction since 2009, when they issued a judgement on the EU’s Lisbon treaty. But before the eurozone crisis erupted in full force, such rulings were fairly uncontroversial. The judges could reasonably argue in 2009 that they were simply testing if the new EU fundamental treaty was compatible with the democratic principles of Germany’s 1949 constitution, known as the Basic Law.
Now that the eurozone crisis has pushed the German government and the European Central Bank into once unimaginable measures to rescue the 17-nation currency bloc, the constitutional court has parked itself on wholly different territory. The judges would indignantly contest this, but when the court opened hearings in June into the legality of the ECB’s actions to protect the eurozone, it looked from the outside very much as if the judges had appointed themselves the supreme law lords of European integration – to the exclusion of any other EU or national legal authority. Read more
By Gideon Rachman
When pundits analyse Angela Merkel’s political success, they tend to fall back on a few well-worn ideas. The German chancellor is said to be a cautious pragmatist, a scientist who proceeds through trial-and-error, a reassuring mother-figure, a natural politician with an instinctive rapport with voters. All these things are true. But they miss out one vital element. Ms Merkel is also a political visionary. In the midst of a sometimes terrifying currency crisis, she has redefined Germany’s relationship with the EU – on a new and more sustainable basis.
The first official German election results are in and Angela Merkel’s Christian Democrats enjoyed a huge swing in the polls, but remain five seats short of achieving the first absolute majority since 1957.
That fires the starting gun for coalition talks, raising some interesting questions, especially after the chancellor’s existing coalition partner, the liberal Free Democratic Party, has crashed from its best-ever election result in 2009 to parliamentary annihilation, failing to reach the five per cent threshold. Read more