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.
Vote 2014
Voting is closed in our Debating Europe Vote 2014! The results are now in, so come and see what our readers thought!
17 comments Post a commentcomment
1.- Recognize the facts of reality.
2.- The Global Economy must readjust and deleverage before a healthy and real growth can restart.
3.- Leaders must find ( decide) which is most efficient and PRACTICAL path for these inevitable readjustment, managing the costs to minimize them, avoiding dangerous popular revolts and social disorders which are out there potentially, maintain social order, inspire and expire, project and propose a vision, a sense that there is a path to a brighter future for all and be certain that if we continue in the path we are now, it is hard not to imagine a very somber future.
4.-The world needs a new global social and development pact. A new strategy for the future. We must rid ourselves of prejudices and have a new vision, forged in the future and not in the past. And we must work on it with the conviction that there is not other way out. And that any other path, will be always more costly, more dangerous and much, much painful. and therefore, more difficult to implement.
5.- The real big question in my mind now is, what will have to be the cost for the world, before we all realize that there is no other way out and start working together?. And I am afraid of the answer. I don´t see that we, the world, are ready to sacrifice what needs to be sacrificed and I think finally the markets and the inevitable forces of economics fundamentals will force te solution at great pain and costs in economic and social terms. I am sorry to be so gloomy and I hope I am mistaken.
Dear Gonzalo,
I agree with you, even if Your intervention is generic and it would be nice to be able to propose a strategy to address the European situation.
“Working together for the future” unfortunately does not mean much. We have to define the real objectives, which the European people is recognized and that you want to define “Working Together.”
People today are afraid and took refuge in the stupid nationalism. The nations have to make convincing proposals on security and growth of European countries.
My proposal of common objectives could be:
SAFETY:
1) Confirmation of the Shengen Treaty and its reinforcement: whoever rejects the Schengen Treaty is outside Europe.
2) integration of the national security apparatus into one great European Police: similar to the FBI.
3) Abolition of National Armies and creation of a European army
4) integration of civil and criminal codes of the different nations: the same penalties for crimes Same throughout europe
5) Creation of a European prisons system
DEVELOPMENT:
1) incentive for private European production reality to produce in the “depressed” areas of Europe. You want a slogan: “we send the Germans in Greece!”
For example, Europe encourages the giant Volkswagen to build a plant in Greece! Ie Let us ensure that the interests and the needs of a nation become the interests of the rest of Europe.
2) reduction in the value of the euro, devaluation: Europe must be competitive on the market.
3) Respect and Promotion of the Diversity within Europe: Europe must not be All Equal: in this Merkel is right!
In Mediterranean Europe you eat well, you wake up later and you enjoy a good climate? Good!
Then New European Policies must be born so that Europe Entire enjoy these benefits and this process creates wealth in the countries of the Mediterranean, which are considered depressed.
It is required A tourism and culture European policy, a policy that incentives European people to visit Pompeii and Sivilla, Athens and Budapest, etc … so those Countries will be rich and beautiful. And, most of all, loved by Europeans.
In Central Europe, however, there are production companies strong and well organized, orderly and efficient Administrative Structures? Good!
Then New European Policies must be born so that new hires in National Public Administrations play paid internships abroad, in Germany, Belgium, France, etc … in order to learn the mentality and efficiently organized in Central Europe.
Alike New European Policies must be born so that University students play paid internships in larger European Companies.
Well, this is a possible draft program, created on the fly at 2 A.M, animated by a sincere passion for Europe What I fear What really will not survive. I hope I’m wrong.
A two speed Europe…?? DISGRACEFUL idea…But it seems that since some states (aka the UK) will never surrender their financial autonomy, then there is no other way..It will come one day though that everybody else will be in the eurozone, and the two speed Europe will be just them and the rest of the Continent..Why the euro is so hard to swallow?
Yes it has its faults, but it is not the euro itself that is to blame, rather our Governments and their mistakes..If we had already the fiscal union in place for the eurozone members, the crisis would have not hit us as hard..Our Governments are keep brushing the rubbish under the carpet and they do not go all the way..
If others want out of the eurozone as well, (Sweden, Denmark, Czech Republic) then perhaps it is decision time for some, and part ways? Off to the EFTA then! I do not think that they should have the same benefits and rights…No more cherry picking! The EP should represent people from the countries that are in this new fiscal union, or are aspiring to become members of. Simply because it is the MEPs that should vote for the majority of the decisions regarding financial policies, and not the different finance ministers of each member state…Hhhmmm..and perhaps we should have an EU finance minister..?
The rest that just want to do trade, then trade will be….
Yes there should…no Country or People should be required to go any further than they wish…i hane NO problem with my Country being in the EEC.
I do not however want my Country to be in the eu or euro…nor do i wish to be an eu citizen.
Oh, dear…The UKIP and BNP supporters have arrived..!!
I do not..and will Never support the bnp.
Oh dear, the EuroZealots are out in force today! I voted Labour in the last election and will vote Out in the referendum. So no ugly aspersions or stereotyping please.
can we? seemed to be aralyzed.
Yes! There are 18, soon 19 euro states. None of them has the same household book. One coin cannot keep them together
A two-speed EU is a discriminating EU!
It is a EU with “first class” citizens and then the “rest”. The world already has the 1st world and the 2nd world and the 3rd world to which people like to give fancy and politically correct names. But we all know that as a segregated world, as a discriminating world, as a marginalizing world.
And so, do we want THAT inside the EU?
My vote is ABSOLUTELY NO!
The rush to ignore EU laws and erect borders between EU member states to deal with migration flows demonstrates that national interest still comes first, 65 years after the ECSC was founded. It also shows that a wider EU-wide demos does not exist on the ground. Further political integration has no real democratic mandate. Eurocrats need to put boots on the ground – their boots – in the countries where they come from, and listen to their peoples.
Turns out even Juncker himself BETRAYED the EU singing to the British tune of “SOE European countries are more equal than others”
some*
Blasted auto-correct…
I’m really afraid about a 2 speed Europe, but I can understand Angela Merkel. I hope my ideas will be good for her to push for an UnitedEurope.
But “Working together for the future” unfortunately does not mean much. We have to define the real objectives, which the European people is recognized and that you want to define “Working Together.”
People today are afraid and took refuge in the stupid nationalism. The nations have to make convincing proposals on security and growth of European countries.
My proposal of common objectives could be:
SAFETY:
1) Confirmation of the Shengen Treaty and its reinforcement: whoever rejects the Schengen Treaty is outside Europe.
2) integration of the national security apparatus into one great European Police: similar to the FBI.
3) Abolition of National Armies and creation of a European army
4) integration of civil and criminal codes of the different nations: the same penalties for crimes Same throughout europe
5) Creation of a European prisons system
DEVELOPMENT:
1) incentive for private European production reality to produce in the “depressed” areas of Europe. You want a slogan: “we send the Germans in Greece!”
For example, Europe encourages the giant Volkswagen to build a plant in Greece! Ie Let us ensure that the interests and the needs of a nation become the interests of the rest of Europe.
2) reduction in the value of the euro, devaluation: Europe must be competitive on the market.
3) Respect and Promotion of the Diversity within Europe: Europe must not be All Equal: in this Merkel is right!
In Mediterranean Europe you eat well, you wake up later and you enjoy a good climate? Good!
Then New European Policies must be born so that Europe Entire enjoy these benefits and this process creates wealth in the countries of the Mediterranean, which are considered depressed.
It is required A tourism and culture European policy, a policy that incentives European people to visit Pompeii and Sivilla, Athens and Budapest, etc … so those Countries will be rich and beautiful. And, most of all, loved by Europeans.
In Central Europe, however, there are production companies strong and well organized, orderly and efficient Administrative Structures? Good!
Then New European Policies must be born so that new hires in National Public Administrations play paid internships abroad, in Germany, Belgium, France, etc … in order to learn the mentality and efficiently organized in Central Europe.
Alike New European Policies must be born so that University students play paid internships in larger European Companies.
Well, this is a possible draft program, created on the fly at 2 A.M, animated by a sincere passion for Europe What I fear What really will not survive. I hope I’m wrong.
A United Europe was, is, and it will be utopia. In fact EU never really existed for peoples, nations and masses. Was invented as a community market in benefit of transnational financial entities, and now is obsolete due to the trend of de-globalisaton. Good intentions, bad results. RIP!
It is sad that it took Brexit for the EU power brokers and fundamentalists to realise that they cannot hold member states over a barrel forever.
Nobody doubts the benefits of the EU but the currency’s implementation, the handling of member states during the financial crisis, the immigration crisis, all these things were dominated by Germany’s opinion.
When Ireland rejected the Lisbon treaty in 2008 Sarkozy went there to talk about “solidarity”, but when the country was bankrupt in 2010 he attacked the Ireland’s vulnerable position and tried to get it to give up its resources. Yes, if a country is bankrupt it should sell some assets, but the change in behaviour from 2008 to 2010 was noted. And Greece also noticed what solidarity means to the EU.
“Solidarity” is the word used by the EU when you are being told to sacrifice something. And many other member states noticed this too.
I personally think its shocking that Greece is on the front line of the refugee crisis, taking the weight of the whole issue on behalf of the EU, and yet the EU do not give them any debt relief whatsoever. Its amazing.
The fact is that Brexit is just the name given to a pattern of events and a pattern of discussion that needed to happen in the EU was very much overdue. Its not a drama or a catastrophe. Its just the natural evolution of the block.
Definitely. We need a 2-speed Europe. Italy, where I am from, forced itself into EU when the ratio public debt/GDP was nearing 100%, an acceptable level but still away from EU standards. After 16 years, the debt has soared to 130% and the GDP has lost 15 percentage points. A minor recovery is ongoing, with 1% yearly growth that will probably just pay the telephone bills. It doesn’t work.