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European Leadership for Sale

While French President Sarkozy today (in his campaign toward Spring elections) promised a revolutionary (and very welcome) shift toward – just like in the USA - reserving a share of European public contracts to small and medium firms (something forbidden so far by the EU Treaty), his socialist rival, Mr. Hollande was quoted in the German press:

Who seriously believes, …”except perhaps a few people in Germany, that we can reduce our deficits if there is no growth?” He also said he is opposed to the European Court of Justice having the power to encroach on national fiscal sovereignty, as is currently stipulated in the fiscal pact.

Very sound Economics 101, indeed good news too.

Less austerity, more growth, French-style. So something is moving in the Old Continent. The power of elections and democracy I guess. Not entirely true. What about Germany? Elections are next year around but Mrs. Merkel is increasingly playing a defensive battle full of unwelcome symbolism.

Alarmed by the rising unemployment rates in south-European countries, the German labour ministry instructed to stop Hartz-IV social  transfers for EU immigrants, Spiegel online cites the Frankfurter Rundschau. Up until now, immigrants from 17 EU countries were eligible to unemployment benefits (Arbeitsgeld II) under the European Convention on Social and Medical Assistance (EFA). Germany revoked its EFA contract commitments with regard to welfare and unemployment benefits. Socialists and the employment agency critised the move.

A very bad move indeed. Understandable but so myopic. Unemployment in many countries in Europe increases also because of German fixation with austerity measures. The natural consequence of this German decision is that European workers in countries with high unemployment – moving toward where unemployment is lower and job chances higher, i.e. Germany – see their move made more costly by the increase in search costs.

Yes, it is understandable. Germans see their taxes rise because of higher unemployment benefits offered to Greek workers migrating to Germany. But right now, this measure has simply the ugly similarity with the one of closing borders and of a retrenching Europe.

Leadership badly wanted in Europe.

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