…. so of course the agreements have to be respected, by everybody. And if the agreements are not respected, it means that we are not in the condition to continue with a country that does not respect the agreements. …. if a member of a club, I am not now speaking about a specific country but if a member of a club does not respect the rules of the club, it’s better not to remain in the club that is for any organization, any institution, in general any project.”
Manuel Barroso, European Commission President, not yet resigning, enlightening us regarding the new Barroso-rule shaping Europe.
Since Mr. Barroso seems to say that countries that do not respect agreements in Europe should abandon the euro area, we have a large set of countries to choose from. Which ones ought to leave the area?
Germany did not respect the Stability and Growth Pact. See what former Chancellor Gerhard Schroeder had to say about it just a few days ago:
When all is said and done we are now recapitulating a debate which we conducted about the stability and growth pact between 2003 and 2004. In trying to reform the pact, Germany and France were not attempting to emasculate its criteria. What they wanted to do was to emphasize the growth element, since Germany was not in a position to cut spending to the tune of billions of euros in addition to pursuing the policy of reform.
Wow. Quite honest of him and quite similar to Greece’s situation today or Italy’s right?
So now, following the Barroso-rule, since we can kick out either Greece or Germany out of the euro area, who would you choose?
You see, the logic of Mr. Barroso leads us to these enlightening discussions. Let’s follow it.
Well, since it looks like economics is ruling Europe and not principles, values, cooperation, solidarity, brotherhood, let’s follow an economic logic.
Surely Germany. If Greece were to adopt the dracma and Italy the lira (why not? after all we belong to Southern Europe, not anymore Europe), can you imagine the contractual chaos that would ensue (and the nice fees for lawyers)? Greek and Italian citizens pretending to pay their debt in devalued drachmas with huge losses for German creditors…. No way.
Much much better for Germans to hold appreciated Deutsche Marks and the rest of the countries to hold on to a (devalued) euro. After all, Germans holding Italian bonds would be paid in euro respecting the formal promise that was made when they bought those bonds. And if Germans owe debt in euro their appreciated mark would make the debt payment much lighter. Over all, much much better, less litigation.
So Germany, step back, for a few years. In a few years a new euro with a stronger Deutsche Mark will be possible, creating less tensions of external imbalances across members of the area.
It is the Barroso-rule that suggest to me these … ficticious considerations.
Seriousness and sense of history would require to save the Union (not “the club” mentioned by Barroso) by reducing imbalances across countries immediately and allow Germany and the rest of the countries to expand through fiscal policies and (in Germany) wage increases.
No other way out. None other is available. Slowly letting go, country by country, millions of worthy individuals with a European passport, will only humiliate these people and make them abandon any interest in the construction of a joint Europe, increasing the strength of nationalistic parties and killing for decades any project of United States of Europe.