Two-speed Europe, or two Europes?
Nov 8th 2011
NICOLAS Sarkozy is causing a big stir after calling on November 8th for a two-speed Europe: a “federal” core of the 17 members of the euro zone, with a looser “confederal” outer band of the ten non-euro members. He made the comments during a debate with students at the University of Strasbourg. The key passage is below (video here, starting near the 63-minute mark)
See the full article
http://www.economist.com/blogs/charlemagne/2011/11/future-eu
It's an interesting question - and possibly one that needs to be addressed quickly, because Sarkozy has valid points and the Eurozone is certainly no closer to financial stability than it was four months ago.
ReplyDeleteIn some ways, this ‘two-speed’ Europe already exists – divided between those who are part of the European Union and those within it who are members of the more tangled Eurozone. In this structure, sometimes those who are affected only marginally by the Euro’s rise and decline wind up having to pay for the sins of the Eurozone, while having received only a few of the benefits that the Eurozone has.
Sarkozy’s plan actually seems to be suggesting an opposite approach – that the core of the Eurozone become more tightly integrated and eject members who are incapable of meeting requirements or maintaining standards (I’m lookin’ at you, Greece), while the outer confederation of the EU benefits from some regulations – such as passport control eliminated – while neither hurting nor helping the Eurozone itself.
Sarkozy’s idea represents one I’ve held about the EU for some time – it expanded too far, too fast and included countries that were still in the early developing stages of a modern economic and political state – namely, Italy, Greece, and Spain. Eurozone members would be subject more internal regulation, and the entrance requirements would be equally as strict, requiring an evaluation of economic/fiscal policy in addition to human rights and so on. This system would definitely help stack the deck in favor of a strong currency backed by strong economies that can assist each other in times of crisis with the confidence that the same mistakes would not be made.
In addition, this ‘divide’ would help encourage weaker and more corrupt economies to regulate themselves with the aim of joining the stronger Eurozone countries. This system would also allow for the strong Eurozone economies to assist ‘outer’ members via bailouts at their leisure – while some insist this means no help at all, I believe that the Eurozone is more protective of ‘European integration’ than anyone else, and would at the very least loan money to lagging brother economies.
Mr. Sarkozy's hist the head on the nail when it comes to Europe's economic problems in this debate. This day in age in politics, it is obvious that the economy and the political actions guiding the world around it are inseparable. We've seen recently how important such decisions can be in the US. As republicans and democrats bickered over debt, S&P rating agency downgraded us for this political dissonance. Because of this downgrade interest rates changed causing even more complications in our struggling economy.
ReplyDeleteIn China we also can see the importance of politics in the economy. By keeping the value of there currency down, they have managed to make trading with other nations extremely lucrative. Sarkozy is right in pointing out this connections.
He points out that a "economic convergence" will be necessary in order to repair the EU, but I feel as though these European leaders aren't serious enough about political integration. I realize that most Europeans nations simply would like to interact economically with there neighbors and not politically, but these nations can't do that anymore if they hope for economic prosperity.
This is a new time for politics and global interaction and Europe shouldn't’t be so afraid of a real Europe federalism. Centralizing power on a certain set of issues will relieve the cleavages between nations that is causing all the friction. Having some countries with extremely aggressive austerity measures, and others that have very different policies. The truth is that the countries have completely different economies under these drastically different policies can’t continue to pretend as though they are the same. Some will end up carrying too much of the weight for others.
It says that Sarkozy is creating a stir with those comments but seems as he was just saying things about the goals of the Europeans that others have been saying for a long time. Having one Europe would require having full integration, which seems as though is impossible because people in different European countries are so varying and have some since of nationalism. Perhaps it would be easy to do this when there were a few countries but now that there are 27, it hardly seems as though it will be possible for much of anything to happen for the countries. In fact, it seems as though the European Union is trying to accomplish a goal that has never been done before in the history: contain Europe in one body of governance. From this notion, it would appear naturally, that it would be difficult to do the same thing for the differing currencies in each country. There should be a concern that creating a two-speed Europe will in fact create a hierarchy of different countries within the European Union where it will be more difficult for the countries that are not at the top level to compete with the counties that are and remain relevant in the big decision that need to be made. Some can question how keeping the Euro zone smaller can in fact help countries like France and Germany keep the power they have in the European Union. Perhaps that is why some were concerned when the non euro came together to have a summit at the same time and at almost the same place as the euro states. However, I believe this is a good thing because it does not seem likely that all of those countries are the same level of development as the euro countries which is reflected when Sarkozy talks about the wasting of money by some of the undeveloped countries to get to the same levels as the developed countries. The divide will make could make it possible for these countries to slowly grow towards being as developed as the euro countries
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