Analytics, EU – Baltic States

Wolfgang Münchau.

The coming two EU country-presidency in 2009 – first Czechs and then, Swedes –do not have to worry: however problems are here to stay. The main one is that these two EU member states are not in the eurozone and French president wants to remain in “at the wheel” until the next eurozone country – Spain becomes the Union’s president at the start of 2010.  

What is interesting in W. Münchau’s view is “six reasons” behind French stand, which are well worth mentioning. The first three “reasons” are purely economic and monetary reflecting modern financial crisis and rescue measures, the latter are going to be even more intense next year. 

The forth reason is about management, or rather mismanagement, i.e. failure of the euro-group to provide leadership during this crisis. It has to be mentioned that the euro-group is an informal group of the eurozone’s finance ministers in which governments discuss issues of mutual concern. But the group has been largely absent during this crisis. Because it lacks sufficient regulatory instruments and real power, e.g. quite improbable that the group would be able to cover the rescue package of 1,8 trillion euro, which actually saved the banks and governments in Europe.

Two other reasons are quite specific: reason number five is that Germany is fast losing allies in its fundamentalist opposition to economic governance beyond the stability and growth pact, writes W. Münchau. The Spanish and the Italians favour it, and even the Dutch have been proposing a eurozone-wide action plan. Now that the crisis has hit Eastern Europe too, Austria, Slovenia and Slovakia will most probably demand solidarity with the eurozone, as well.

The sixth reason is connected to the mounting uncertainties about the governing European integration document – the Lisbon Reform Treaty. The treaty intends to establish a permanent presidency of the European Council, which could deal with EU problems beyond a six-month horizon, stretching to several years. As long as the treaty is not yet ratified, the EU leaders are forced to find other palliative measures in critical situations.

Will Mr. Sarkozy succeed in his intentions, asks Mr. W. Münchau? And provides us with his answer. Ms Merkel will probably continue to boycott any French efforts in this direction; German officials have developed a habit of reacting negatively in anticipation of what the French might propose. But French president knows pretty well what he is up to. And most certain that German chancellor would be forced to react, better sooner then later.

 No doubt that the French position deserves closer attention and investigation.