The mother of all fights about inflation, growth and banks

From left to right: Jeroen Dijsselbloem, President of the Eurogroup and Olli Rehn, Vice President of the European Commission. Press conference after the Eurogroup meeting of 27/1/2014. (The Council of the European Union photographic library).

From left to right: Jeroen Dijsselbloem, President of the Eurogroup and Olli Rehn, Vice President of the European Commission. Press conference after the Eurogroup meeting of 27/1/2014. (The Council of the European Union photographic library).

Reading two accounts by two different people, about what happened in the Eurogroup meeting yesterday in Brussels, gives a clear indication of what will be decided in the ECOFIN Council today. Ollie Rehn, Vice-President of the European Commission and member of the Commission responsible for Economic and Monetary Affairs and the Euro, and Jeroen Dijsselbloem, President of Eurogroup, both spoke in the same Press conference after the meeting, about their own impression of it and the present and the future of Eurozone.

Rehn actually avoided reporting on the doings of the meeting for two reasons. Firstly, because this is the job of the President of the Eurogroup, and secondly due to the fact that he wanted to distance himself from the decision-making procedure of the Council. Instead, he gave his own assessment about the present and the future of euro area, a narrative that was more political and visionary than his usual matter of fact attitude.

Rehn against Schäuble

The Commissioner made a brief anatomy of the present conjuncture by saying that this was the first time after some years that Eurozone was not the main issue at the Davos Forum. This time it was the problems that the emerging markets are facing and the “other challenges in the world economy”. As for the Eurozone economy he assessed it positively “clearly strengthening, albeit still gradually”.

However he didn’t want to miss the opportunity to remind everybody about the fact that his opinion on the growth prospects of Eurozone differ greatly from the analysis of the situation by German Minister of Finance Wolfgang Schäuble. Their differences, about the need, as argued by Rehn, for a bit more inflation to support growth, became famous last week, almost prompting a war of words. The German minister quite rudely dismissed the need for more inflation. Rehn also indirectly referred to the greatly diverging opinions of the Commission and Germany about the European Banking Union. Let’s have a look.

The Commissioner, after assessing the Eurozone economy positively, said “Of course, this is not to say that there would be no challenges for Europe or for the Eurozone. Not at all. In fact, it is now essential that we stay the course of economic reform, both in the Member States as well as at European level, for instance, by completing the work on the Banking Union on time”. Of all the reforms and policies needed to keep Eurozone in course, Rehn had to mention the Banking Union.

Growth and Banking Union

There are many reasons for that. Firstly, because the Banking Union will be discussed in the ECOFIN today. His remark then about the need to complete it “on time”, is a direct reference to the position adopted by the Parliament, which totally opposes the German plans. It is obvious that here Rehn strongly supports the common vision of the Parliament and the Commission about the Banking Union. If Germany insists on rejecting it today, Rehn sees a danger of fatal delay.

In reality, if there will be no convergence of opinion now, between the two legislative bodies – the Parliament and the ECOFIN Council – the Banking Union will not be voted within the life of this Parliament. The dead-end for the adoption of the relevant Regulation is May, before the European election. The next Parliament may be much more hostile to Germany’s proposal, a prospect that Schäuble pretends to ignore.

Last but not least, Rehn concluded that the target of all policies has to be to “win the most important battle of all, the battle to create more jobs for Europeans”. Again Germany never accepted that the target to safeguard jobs is of a greater importance than the reduction of fiscal deficits in member states. It seems that the Commissioner thinks Eurozone has today arrived at that point, and needs to prioritise growth and jobs rather than austerity and lower deficits. This is probably the first time that Rehn says that so clearly.

Teutonic Dijsselbloem

Passing now to Dijsselbloem’s narrative about yesterday’s Eurogroup meeting, he was obliged to make typical reference about newcomers to the group and things like that. Then he came to the core issues “about the upcoming months for the Eurogroup”. All his comments were supportive of the German positions, on the two burning issues, growth and the Banking Union.

On the first theme he made no reference at all to employment and jobs. Instead his remarks are obviously in support of the German position, that growth must not be supported by monetary measures. So he said “Our main priority will be pushing through structural reforms to strengthen sustainable growth in the euro area”. Mind you that he puts the emphasis on two key phrases the Germans like most; structural reforms and sustainable growth.

Forgetting the Parliament

As for the Banking Union, the President of the Eurogroup couldn’t be more Germanic. He supported all the key proposals that Berlin promotes and Dijsselbloem openly supports. He said “our aim is to finalise the negotiations and that is of course primarily a responsibility for the Greek presidency and the Commission negotiations on the Single Resolution Mechanism package in time for the April plenary session of the European Parliament, including the intergovernmental agreement on the Single Resolution Fund”.

For one thing, he is openly sidestepping the role of the Parliament as Schäuble did some weeks ago. He said that negotiations will be conducted between the Greek Presidency of the Council and the Commission, altogether forgetting to mention, that the main negotiations are presently being conducted between the Council and the Parliament. He also takes as given the fact that the Intergovernmental Agreement on the Single Resolution Fund, will be in time introduced in the Parliament, expectantly to be passed.

He pretends knowing nothing about the fact that the Parliament has unanimously rejected the German plan for this Intergovernmental thing. He also seems not to have heard anything about the fact that the Parliament and the Commission are together in the whole affair of the Banking Union and the resolution mechanism for failing banks, supporting the same positions for equality, transparency and democratic accountability.

This Dutch minister of Finance follows exactly the steps of his German peer who has recently ‘ordered’ the Parliament to immediately approve this Intergovernmental arrangement. All in all, there is no doubt that today in the ECOFIN Council there will be a memorable fight.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

EU Youth Conference in Amsterdam: enabling young people to engage in a diverse, connected and inclusive Europe

China is a renewable energy champion. But it’s time for a new approach

The four top Americans who flew to Europe perplexed things about Trump’s intentions

Wednesday’s Daily Brief: Guterres in Kenya, Prisoners sick in Iran, #GlobalGoals, Myanmar, Ukraine updates, and new space partnership

Iraqis paying an ‘unthinkable price’ to be heard, UN envoy tells politicians in Baghdad

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

Migration: Better travel safe than sorry

Myanmar military target civilians in deadly helicopter attack, UN rights office issues war crimes warning

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

Innovation can transform the way we solve the world’s water challenges

Effective multilateralism the antidote to today’s ‘divisions’, Holy See tells UN Assembly

How building renovations can speed up the electric vehicle revolution

Online shopping across the EU to be easier from 3 December

Key economic forum in Russia: New technology a ‘vector of hope’ but also ‘a source of fear’ says Guterres

Canada has the most comprehensive and elaborate migration system, but some challenges remain

Nuclear non-proliferation treaty an ‘essential pillar’ of international peace, says UN chief

Food safety: more transparency, better risk prevention

Number of members in Parliament’s committees to change after Brexit

Worldwide UN family celebrates enduring universal values of human rights

UN chief hopeful for Libya, after Quartet meeting in Tunis

‘Dangerous nationalism’ seriously threatens efforts to tackle statelessness: UNHCR chief

Why do medical students need to go abroad to become a doctor in 2017?

State aid: France to recover €8.5 million of illegal aid to Ryanair at Montpellier airport

A Sting Exclusive: “Europe needs decisive progress for stronger cybersecurity”, EU Commissioner Gabriel highlights from Brussels

Facility for Refugees in Turkey: €127 million to boost EU’s largest ever humanitarian programme

Employment: Commission proposes €1.6 million from Globalisation Adjustment Fund to help 400 workers made redundant in Carrefour Belgique

Tiny Iceland teaches the West how to treat bankers

Yanis Varoufakis: “Unsustainable debt turns the creditor into Leviathan; Life under it is becoming nasty, brutish and short”

Following the World Cup? Then you’re watching high-performing migrants at work

EU cross-border payments outside Eurozone: MEPs scrap excessive fees

UN urges protection of indigenous peoples’ rights during migration

This incredibly detailed map of Africa could help aid and development

The movement of anti-vaccers: taking humanity back 200 years

The city of Quito just made commuting quicker and safer

Mind control using sound waves? We ask a scientist how it works

Tech companies are changing, for the better

MARKUP initiative to boost market access to Europe for East African SMEs

Tourism offers much to the EU gets a little

Why India can show us how to achieve growth with purpose

Gender equality in STEM is possible. These countries prove it

3 ways to use digital identity systems in global supply chains

Chinese economy to raise speed and help the world grow

How India is harnessing technology to lead the Fourth Industrial Revolution

After swallowing effortlessly the right to be forgotten time for Google Ads now to behave

EU Youth Conference in Riga concludes with recommendations for ministers

Ozone on track to heal completely in our lifetime, UN environment agency declares on World Day.

With half of Somaliland children not in school, UNICEF and partners launch education access programme

Security Council calls for dialogue in Haiti

Spain will soon overtake Japan in life expectancy rankings. Here’s why

Thursday’s Daily Brief: Press Freedom Day, Tuna Day, cultural dialogue, #GlobalGoals awards, updates on Syria, Somalia, Mali

The Irish Presidency bullies the Parliament over EU budget

Multilateralism must weather ‘challenges of today and tomorrow’ Guterres tells Paris Peace Forum

Friday’s Daily Brief: human rights in Sudan, sombre anniversaries for Rwanda and Nigeria, and fears of ‘chaos’ in Libya

European Youth Forum demands immediate action & binding agreement on climate change

Economic sentiment and business climate stagnate in miserable euro area

Climate change recognized as ‘threat multiplier’, UN Security Council debates its impact on peace

Easier Schengen Visas for non-EU holiday makers: A crucial issue for south Eurozone countries

Here’s how to rebut the climate doom-mongers

Backed by UN, Asia-Pacific countries to advance space technology for ‘development transformation’

Rural women a ‘powerful force’ for global climate action: UN Secretary-General

More Stings?

Speak your Mind Here

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

WordPress.com Logo

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

Google photo

You are commenting using your Google 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 )

Connecting to %s