WEEKLY COMMENT 24-08-2017
By Barry Edwards
A European Future
The European Union’s web based network EUROACTIV reported this week that German Finance Minister Wolfgang Schäuble is working on a proposal that would allow southern Eurozone countries to tap into the single currency bloc’s bailout fund to boost investments during recessions. The plan would mark a major change of policy for Schäuble who had until recently always opposed transfers from richer Eurozone countries to poorer members like Greece.
Germany is the biggest contributor to the European Stability Mechanism, the Eurozone’s bailout fund. Schäuble intended to make the proposal after Germany’s 24 September election, which his coalition conservatives, led by Chancellor Angela Merkel, are expected to win. In exchange for more flexible access to the ESM, Schäuble wants the fund to have more say over national debt and budgets. The proposal is a goodwill gesture toward French President Emmanuel Macron who has vowed to work with Merkel on a road map for closer Eurozone integration.
Schäuble said earlier this year that he shared Macron’s view that financial transfers from richer to poorer states are necessary within the Eurozone. A joint Eurozone budget and a common finance minister are among ideas for deeper European Union integration around the single currency after Britain leaves the EU in 2019. Completing a banking union has also been proposed.
There is clearly a lot of politics in this announcement but the acceptance of the concept to allow real transfers of cash from the richer northern to the southern countries does mean that the resistance to unification of the Eurozone countries’ economies has been lifted. Most commentators have said that the Eurozone can only survive if this did happen which means that the EU will have two different kinds of member, one financially inter connected and the other mainly an associated trading member.
It would appear that this new framework of having an associated trading member is getting much nearer to the ultimate objective of the UK. It is not surprising that this announcement has not been publicised at all in the UK since the government may have to change its view about the proposals they are currently formulating for Brexit. We will have to wait and see if any reference is made to this possibility but it seems that the EU is finally moving towards a dual membership format with different rules for each kind of member.
There is a lot of support amongst EU members for a change in the complete free movement of people to another arrangement that would restrict the right to move if you do not have the means to do so or there is a job for you. Apparently this can be done within the current EU treaty and there have been some reports that governments are discussing this at the moment. The only other problem for the UK would be the European Court of Justice (ECJ). Low and behold, this week we have seen announcements that the government accepts there may be some cases where the ECJ does have some involvement in disputes in matters to do with the EU.
The main reasons for the UK leaving the EU are slowly beginning to be eroded as the major countries begin to look again at the real issues mostly recently inspired and encouraged by Emmanuel Macron. Establishing a European federal union has been discarded for a more unified Eurozone with associate members working closely with them. The framework has clearly been outlined with, it appears, the support of many member countries who want to see a more functional EU responding to the wishes of the people who have felt ignored by their governments in deciding the future of the EU.
With Brexit dominating the media in the UK, this is not a discussion that many people seem to want but clearly events are changing long held perceptions of a declining EU about to disintegrate into chaos. The growth of the EU economy, especially the central and eastern countries, is feeding demand for UK products and exports are growing at a rate not seen for some time. This is having an impact on the opinion of many people who do not see the EU as a disaster waiting to happen but as a union with potential since their growth rate is now double that of the UK. The time is about to come when people have to take note and rethink their concepts of the EU and realise it is not the hopeless basket case many believed it to be.
I look forward to your comments, that’s all for this week.