Italy’s Letta: A European Banking Union soon or Eurozone collapses

José Manuel Barroso, President of the EC, and Olli Rehn, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro, participated in the Bureau of European Policy Advisers (BEPA) conference on "The blueprint for a deep and genuine EMU (Economic and Monetary Union): Debating the future economic, monetary, banking and political union" with Jean-Claude Thébaut, Director General of the BEPA. (EC Audiovisual Services).

José Manuel Barroso, President of the EC, and Olli Rehn, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro, participated in the Bureau of European Policy Advisers (BEPA) conference on “The blueprint for a deep and genuine EMU (Economic and Monetary Union): Debating the future economic, monetary, banking and political union” with Jean-Claude Thébaut, Director General of the BEPA. (EC Audiovisual Services).

While the European Council of the 27 EU leaders has only ‘energy’ and ‘taxation’ in its agenda today, with poor results expected on both accounts, the hot issue of the European Banking Union will probably consume most of the time in the side meetings. The enactment of the EBU has become now the main point of friction between the two Union’s camps, the ‘austerity lovers’ and the ‘relaxationists’. The latter side now raises the stakes in support of the EBU.

The European Banking Union is the new way to restart Europe. The Sting writer Dennis Kefalakos wrote on 2 May “The Eurozone group of countries which back the growth argument, comprising today apart from Italy and France the entire southern periphery plus Ireland, will most probably find a strong ally in the Governor of ECB. Mario Draghi insists that the central bank’s monetary policy has to be freely transmitted all over the Eurozone, to reach all the small and medium enterprises of the euro area. That is why he insists, as Letta now does, that the Banking Union must be enacted the soonest possible”.

To this effect one day ahead of the summit of the 27 heads of EU governments and states, the Italian Prime Minister, Enrico Letta, delivered yesterday in the Rome Parliament an inspired speech about the EBU. It was targeted to remind to his colleagues in today’s meeting that they behave as if the EU has no burning immediate problems. He insisted that the EU should act quickly to enact its Banking Union, with one supervisory mechanism under the roof of the European Central Bank and one set of common rules, the same for all.

The Italian ultimatum

According to Letta the lack of progress in this front has undermined the credibility of the Union revealing to the rest of the world how difficult it is in the EU to pass from pompous statements to decisions and acts. He added that if the Union doesn’t accelerate in confronting its problems, it will collapse. Letta stressed that the Union must now give absolute priority to growth and job creation rather than following blindly the austerity policies for fiscal consolidation. At this point it has to be mentioned that Italy is doing a lot to reduce its fiscal deficits. The country’s constitution obliges the government to zero those gaps by the year 2015, a target that is rightly served up to now. Then Letta concluded that if the Union continues on the same path, the ‘five star’ political formations will gain in power.

At a time when France is occupied with its internal problems, Italy has become the key player in the ‘game’ between Germany and the South. The country has a very strong backbone of small and medium enterprises and a competent agricultural sector that turn out a variety of products and services as Germany and France taken together. Annual exports reach usually €400 billion, supporting millions of jobs that Germany puts now at stake.

Given that, Rome has a lot to lose, if the Teutonic recipe for fiscal consolidation is applied to the end, and destroys this well-developed Italian productive machine. Greece, Spain and Portugal are not in the same footing. They have no chances  to survive, if they quit Eurozone. Italy has, and can swiftly return to the old tool, to strengthen its competitiveness; the lira devaluation. Exactly as Japan does (more debt, more growth). In conclusion, Italy means what it says about the possibility of a European collapse, which is tantamount to a direct enunciation over a possible return to old national currencies.

This is the only argument that Germany may take seriously. Letta must have meant every word he said yesterday, wanting to give some food for thought to today’s EU summit. This Italian politician, heading a very difficult left-right government has no manoeuvring space and as a result he is not bargaining. He issued his warning in the form of ultimatum, and this is the way it has to be read in Berlin.

The European Parliament

The European legislators have taken the message and they now quickly promote the enactment of the Banking Union. To this effect the European Parliamentarians yesterday welcomed the package of rules setting up a single EU bank supervisor, the ECB. Despite the fact that they acknowledged that the system may not be perfect, many MEPs stressed that it was a step towards truly addressing the causes of the crisis.

By the same token the European Parliament also this week promoted the directive for banks resolution and recovery, in the environment of the future Banking Union. The legislators decided that taxpayers and savers must be the last people called upon to bail out banks. This was the Parliament’s negotiating position, approved by the Economic and Monetary Affairs Committee on Monday, on draft rules on saving struggling banks. The text rules out using deposits below €100,000 and says that even deposits above €100,000 should be the last to be called in. The committee voted against using deposit guarantee funds for resolution actions and also set out strict conditions for using taxpayer’s money.

In view of all that Germany tries to delay this EBU project. The German Finance Minister, Wolfgang Schaeuble, one day says that the Banking Union presupposes a new European Treaty, and the next he retreats and appears happy with minor changes in the existing Treaties. It will go like that until the German elections in September. The reason is that the average German voter will take the EBU as a step towards mutualisation of all Eurozone debts.

After the elections, however, the whole Union will rise up and force Berlin to agree. Even Jörg Asmussen, the German economist and politician, member of the executive board of the European Central Bank said yesterday that the European Banking Union can be accomplished by mid-2014. The enemy is inside Berlin…





Featured Stings

Spirit unlimited


#TwitterisblockedinTurkey and so is Erdogan

Maroš Šefčovič, Vice-President of the EC in charge of Energy Union at the Western Balkans Summit last August (EC Audiovisual Services, 27/08/2015)

From Russia with love: Brussels and Moscow close to an agreement on Ukraine’s gas supplies

It is me

Arif Shala is a a doctoral student at the Ludwig Maximilians University in Munich, Germany and executive director at the Institute for Economic Development Studies in Prishtine, Kosovo.

On Youth Participation: Are we active citizens?

European Parliament. Committee on Economic and Monetary Affairs (ECON). Meeting on banking supervision. Vote on the bank single resolution mechanism and fund. (EP Audiovisual Services).

168 hours left for MEPs – ECOFIN Council to deliver a Banking Union

Angela Merkel, German Federal Chancellor and Francois Holande, President of France (from left to right) arrive together to the European Council room. The French President seems to describe with his gesture, how efficient the French fighter-bomber planes are. The Chancellor must have responded that the German Leopard tanks are equally effective on the ground. (Council of the European Union Audiovisual Services 19/12/2013).

EU security and defence industry prepares positions for ‘producers’ and ‘customers’

European Commission President José Manuel Barroso, presenting the "Europe is on its way to meeting its 2020 targets" report. The stubbornly subdued state of the EU economy though is in direct contrast with the optimism of the outgoing President. (EC Audiovisual Services, 21/03/2014).

Data show EU Economy in a stubbornly subdued state

"Do you see how calm he is with the Greek banks shut"? Dijssebloem could as well be telling to Draghi yesterday at the Euro Summit. From left to right, Mario Draghi, Governor of the European Central Bank, Alexis Tsipras, Prime Minister of Greece, Jeroen Dijssebloem, President of the Eurogroup and Finance Minister of the Netherlands. (Council TVnewsroom, 07/07/2015)

Juncker and Tusk killed Greece on 07 July 2015 to meet the Commission’s summer vacation plan? #Grexit #Greferendum #Graccident

Press conference by Neelie Kroes, Vice-President of the EC, on the Net Neutrality. (EC Audiovisual Service)

The big five EU telecom operators in dire straights

Towards the Rise of the United States of the Atlantic?

Discussion between Angela Merkel, German Federal Chancellor, on the left, and José Manuel Barroso President of the European Commission, 2nd from the right, in the presence of Mark Rutte, Dutch Prime Minister, on the right, and Herman van Rompuy President of the European Council. Barroso and several heads of states or governments of the EU discussed on a report entitled "Cut EU red tape", published by the British Government on 15/10/2013, which presented 30 priority recommendations of EU regulations. During the joint final press conference José Manuel Barroso outlined discussions which took place on access to finance for SMEs and the regulatory fitness. (EC Audio-visual Services)

Forget about growth without a level playing field for all SMEs

Mario Draghi looks determined to apply Quantitative Easing in 2015, at the EP Committee on Economic and Monetary Affairs Monetary Dialogue, last November. Mario Draghi is the President of the European Central Bank (EP Audiovisual Services, 17/11/2014)

Draghi’s top new year resolution: Quantitative Easing

European Confederation of Junior Enterprises hosts in Geneva the Junior Enterprise World Conference

Family picture after the 3rd meeting of the High Level Expert Group on Key Enabling Technologies, with the participation of Antonio Tajani, Vice-President of the EC, and Johannes Hahn, Member of the European Commission. (EC Audiovisual services, 29/01/2014).

Economic sentiment and business climate stagnate in miserable euro area

Conference in the European Parliament on combatting poverty and social exclusion, (European Parliament Audiovisual).

The vicious cycle of poverty and exclusion spreads fast engulfing more children

From left to right: Mr Olli Rehn, Vice President of the European Commission; Mr Michael Sarris, Cyprus Minister for Finance. (Council of the European Union photographic library)

Eurozone in trouble after Nicosia’s ‘no’

Dijsselbloem to Schauble: "Wolfgang, just think for a moment; I think we are making a tremendous mistake with Greece"; this could or should be Mr Dijsselbloem's saying to Mr Schauble yesterday afternoon during the Eurogroup gathering in Brussels. The photo is black and white probably because it will be one that will endure in the European history books of the future to open the "pandora box" EU chapter. From left to right, Jeroen Dijsselbloem, Dutch Finance Minister of Finance and Wolfgang Schauble, German Minister of Finance, during yesterday's historic Eurogroup meeting in Brussels (EU Council TV Newsroom, 16/02/2015)

On Grexit: Incompetence just launched the historic Ultimatum that could open “pandora’s box”

Vítor Constâncio, Vice-President of the European Central Bank, on the left, and Mario Draghi, Governor of ECB. (EC Audiovisual Services).

ECB asks for more subsidies to banks

Antonio Tajani, Vice-President of the EC in charge of Industry and Entrepreneurship (first from left), went to Rome, in the toy shop "Little Big Town" in Piazza Venezia, to present the "EU Stop Fakes" campaign in the presence of Ivano Maccani, Provincial Commander of the Guardia di Finanza (Italian Finance Guard) (second from left). (EC Audiovisual Services, 20/12/2013).

Towards a seamless internal EU market for industrial goods

BusinessEurope Day on the occasion of the publication of the Blueprint for Industrial Competitiveness entitled "Industry matters: Recommendations for an industrial compact". Michael Rake, Chairman of BT Group plc and President of the Confederation of British Industry (CBI), Ingo Kramer, President of the Confederation of German Employers’ Associations (BDA), Pierre Gattaz, Chairman of the Executive Board and President of the Executive and Strategic Committee of Radiall, President of the Movement of French enterprises (Medef), and Antonio Tajani, Vice-President of the European Commission in charge of Industry and Entrepreneurship (from right to left). (EC Audiovisual Services, 28/01/2014).

Industrial producer prices on free fall and stagnant output

Press conference by Harald Wögerbauer, Member of the European Court of Auditors (on the left), on the cost-effectiveness of Cohesion Policy investments in energy efficiency. (EC Audiovisual Services)

€5 billion of EU energy efficiency project money spent on “comfort”

Discussion between Martin Schulz, President of the EP, on the left, and José Manuel Barroso, President of the EC, during the last European Council of December 2012. During the final joint press conference Barroso stressed that the financial sector also had to make a fair contribution to the recovery of Eurozone.  Then the EC decided the first step towards launching enhanced cooperation on a Financial Transactions Tax (FTT). (EC Audiovisual Services).

Financial transactions tax gets go ahead

The Sting’s Team

Connie Hedegaard, Member of the EC in charge of Climate Action, gave a press conference put forward proposals to implement targets that will further considerably reduce carbon dioxide (CO2) emissions from new cars and light commercial vehicles (vans) by 2020. The proposals will cut average emissions from new cars to 95 grams of CO2 per km (gr CO2/km) in 2020, from 135.7gr in 2011 and a mandatory target of 130gr in 2015. Emissions from vans will be reduced to 147gr CO2/km in 2020 from 181.4gr in 2010 (the latest year for which figures are available) and a mandatory target of 175gr in 2017. Monique Goyens, Director General of the European Consumers’ Organisation (BEUC), on the right, and Connie Hedegaard, (11/07/2012).

European car industry: The Germans want it all

Jean-Claude Juncker, President-elect of the EC, gave a press conference on the attribution of portfolios to the Commissioners-designate. He unveiled his team and the new shape of the next European Commission.
After the EU had come through one of the most testing periods in its history, one of the biggest challenges would be to convince citizens that things will change. To deliver change, the Commission needed to be open to reform. (EC Audiovisual Services, 10/9/2014).

There is a way for Eurozone to reach a sustainable growth path


Global Citizen – Volunteer Internships

Alan Borgars

On youth unemployment: unemployment is even bleaker for youth with disabilities

Marianne Thyssen, Member of the European Commission in charge of Employment, Social Affairs, Skills and Labor Mobility, gave a press conference after the EC proposed to make 1 billion euro from the Youth Employment Initiative available as early as this year. (EC Audiovisual Services, 04/02/2015).

Can the national and age groups pockets of unemployment cause irreparable damages to Eurozone?


European Youth Forum welcomes the European Commission’s proposed revision of the Union Code on Visas, however it does not go far enough

Group photo: Teima Onorio, Vice President of the Kiribati, Madelyn Antoncic, Vice President and Treasurer of the World Bank, Kristalina Georgieva, Member of the EC in charge of International Cooperation, Humanitarian Aid and Crisis Response, Mohamed Najib Boulif, Moroccan Minister Delegate to the Head of Government, in charge of General Affairs and Governance, Jim Yong Kim, President of the World Bank Group, Koriki Jojima, Japanese Minister for Finance, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), Ilyas Moussa Dawaleh, Minister for Economy and Finance of Djibouti, in charge of Industry and Planning, Haruhiko Kuroda, President of the Asian Development Bank (ADB), Naoko Ishii, CEO and Chairperson of the Global Environment Facility (GEF), and Michael Anderson, Director General for Policy and Global Issues at the United Kingdom Department for International Development (DFID) (from left to right). World Bank, organized a special conference called "Dialogue of Sendai" on managing natural disaster risk. (EC Audiovisual Services, 10/10/2012).

IMF launches a new offensive against Germany

haan (1)

Bram in Colombia

Joaquín Almunia, Vice-President of the EC in charge of Competition, gave a press conference on Statement of Objections of the EC to Crédit Agricole, HSBC and JPMorgan for suspected participation in euro interest rate derivatives cartel. (EC Audiovisual Services, 20/05/2014).

The EU Commission implicates major banks in cartel cases, threatens with devastating fines

Photo reportage of open air market. (EC Audiovisual Services).

Horse meat runs faster than authorities…

It seems that not even Dan Mullaney, Chief US Negotiator for TTIP, can believe that Cecilia sees a "fresh start" in the negotiations! From right to left, Cecilia Malmström, Member of the EC in charge of Trade and Dan Mullaney, Chief US Negotiator for the Transatlantic Trade and Investment Partnership (TTIP). (EC Audiovisual Services, 08/12/2014)

Is a full course lunch, a new Commissioner and 2 million anti-TTIP citizens what you would call a “Fresh Start”?

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s