EU finance ministers have been meeting today in Poland to discuss Greek debt and how to encourage calm and stability in the roller-coaster ride that has become the Eurozone. Over the past few weeks, Debating Europe has likewise been discussing possible solutions – from abolishing the Euro, to allowing a Greek default, to Germany leaving the Eurozone, to instituting Eurobonds and a “lender of last resort”, to implementing full fiscal union with a common treasury and an EU finance minister – we’ve looked at a broad range of different proposals. However, there is one thing that all of these ideas have in common… and that’s nobody can agree which is best. Today’s meeting of finance ministers, for example, could only reach agreement on deferring its judgement on the Greek loan decision until October. In other words: it has been decided not to decide.
It is precisely this indecisiveness which is eating away at market confidence. Is a compromise still possible? Is there a way for EU member-states to have their cake and eat it? Could those countries that want deeper fiscal integration get on with it, whilst those that want to opt-out are allowed to sit on the sidelines? George Osborne, the UK’s Chancellor of the Exchequer, today argued that:
Crucially, my European colleagues need to accept the remorseless logic of monetary union that leads from a single currency to greater fiscal integration.
But, for Osborne, this “greater fiscal integration” would not involve British participation. The EU has always had a sort of “two-speed” approach to issues, with frequent opt-outs, opt-ins and different rules for different member-states. However, Osborne’s comments signal that the UK would be happy to see this approach accelerated – with a core group of Eurozone economies achieving some form of fiscal union whilst others go at a slower pace.
We asked Peter Spiegel, Brussels bureau chief of the Financial Times, for his thoughts on a “two-speed Europe”:
I think it’s inevitable and, frankly, probably the right thing to do – for the Eurozone to come together and go at it’s own speed… At this point, the Tories seem to have made a decision that they will support this. I actually think the bigger pushback is going to come from the new member-states. They are bound by treaty to join the Euro. Some of them have their currencies pegged to the Euro – the Baltic states, for example. If they leave the decision-making to the 17 existing Eurozone members, the new member-states are going to cause problems.
Which is precisely what we’ve been seeing in recent days. A group of Eastern European states, all of them obliged by treaty to eventually join the Euro, are now arguing that they should be able to participate in the discussion on the future of the Eurozone. Poland’s European Affairs Minister, Mikolaj Dowgielewicz, is one of those leading the charge, arguing that:
“It is logical that countries who have a destiny to join the Euro meet”
Poland and others are increasingly concerned that the Eurozone they agreed to join is about to change beyond all recognition, and yet they do not have a seat at the negotiating table because these decisions are typically being made amongst the 17 existing Eurozone members. We spoke to Minister Dowgielewicz, and asked him what he thought about the idea of a “two-speed Europe.”
Well, I think that what is important to remember is that, in fact, it’s not a question of how big the circle is – but of how effective the procedures are. I’m not saying that the European Union has handled the crisis in the best possible way, but I think that with the work that the Council and Commission have been doing that we can agree on a solution to the crisis.
We can still effectively take decisions in the circle of 27. I think in some areas, for example, in defence, that we may need to implement structured cooperation, but as long as you do such things in line with what the treaty says it is okay. However, if you ask me about economic governance, then I would say we have brought about the Euro Plus pact – so I think you can put substance into this pact. But on a very big range of economic policy issues you need to have coordination not just with Eurozone members but also with non-members. You can only have a win-win situation if you also involve Poland, Sweden, etc. So, I’m very much in favour in trying always to look for inclusiveness and synergy, and I’m very much against attempts to divide and reduce the number of participating states.
Does this signal a shift in Polish attitudes to the Euro? A more hostile approach? We’ve had some discussion on Debating Europe about the break-up of the Eurozone – is this something Minister Dowgielewicz thinks possible?
I think that there is no question that the Single Currency will survive – the Euro is a big asset and a big instrument of European integration and, for many practical reasons, it’s not possible or imaginable that you can dissolve the Euro. You basically have to realise that anything of this kind would be like a financial tsunami, and not just for markets but for citizens and companies.
What do YOU think? Do you agree with Peter Spiegel and George Osborne that a two-speed Europe is the way forwards? Or with Mikolaj Dowgielewicz that Europe should aim for consensus amongst the 27 member-states. Let us know in the form below, and we’ll take your comments to experts and policy-makers for their reactions.