Ironically, I remember several interesting discussions with my Italian federalist friends who have always lobbied within JEF and UEF to support the introduction of Eurobonds – to allow the EU (budget) to run deficits primarily for EU-wide infrastructure projects. I have always (and continue to) oppose this idea because I think we do not need another layer of debt  in the EU while there is sufficient room for mobilising funds to invest in EU-wide infrastructure projects from the ineffective CAP and structural policy – and where necessary also from national coffers. While the financing mechanism for these Eurobonds would be the same, the current discussion is promoting Eurobonds on a very different level.

Eurobonds to solve the debt crisis

Eurobonds as advocated these days are seen as a tool to lower borrowing costs for peripheral Eurozone countries (Greece, Ireland etc.) who struggle with run-away interest rates on newly issued debt. They are practically cut off from the market, hence EU intervention mechanisms like the EFSF are now used to finance their debt. In some ways the EFSF is not so much different from the Eurobonds discussed today except the fact that the EFSF is primarily seen as a crisis intervention – and not a permanent – vehicle. Because (just like with the EFSF) Eurobond debt is guaranteed by countries like Germany or the Nordics borrowing is cheaper for such jointly guaranteed Eurobonds. So, why should we not issue Eurobonds for all EU countries, lowering borrowing costs for those in trouble and thereby help them out? – Because of moral hazard, you silly.

If deficit-prone countries can borrow at cheap rates again, what is their incentive to create sustainable public finances in the first place? Experience tells us that without tougher institutional provisions this is unlikely to happen: When (debt) interest rates decreased dramatically for countries like Italy or Greece after they joined the Euro in the early 2000s, their budgetary profligacy did not stop. Allowing them cheap access to new bonds is unlikely to change the picture. Unless it is done in a more intelligent way this time…

How to make Eurobonds work

The primary challenge is to prevent a repetition of what happened after the Euro introduction, i.e. letting countries accumulate even more debt because the interest on it is so cheap. However, if there were mechanisms to overcome this problem, then Eurobonds would be a helpful tool to potentially help Greece et al. out of the debt spiral they are in. How can this be done? – I believe this can be achieved through a number of (national) institutional provisions, which should be made a pre-requisite for anyone seeking Eurobonds. Such measures should include:

- a zero-deficit (balanced-budget) rule at national and sub-national level that is anchored in the constitution. Realistically, it would be phased in, just like Germany’s ‘Schuldenbremse’;

- a rainy-day fund (Singapore-style?) that takes away from policy-makers at least 50% of budget surpluses and any privatisation proceeds. It may only be tapped under severe economic downturns;

- an independent adviser on national economic development who suggests the growth assumption underlying the national budget (this could e.g. be the EU Commission, OECD etc). Any surplus achieved during the financial year or revenue beyond the initial projection would be locked up;

- a mechanism of regular EU inspections to oversee the reliability of national public finances (maybe via a special cooperation between OLAF-like units and Eurostat);

- a maximum debt level financed through Eurobonds. This could conveniently be at 60% (following the Maastricht criteria) but I think it should be lower at maybe 30%;

- an initial list of state assets that are handed over to the rainy-day fund to be sold or privatised whenever the highest value can be obtained;

- a sustainable answer to government pension (and potentially health) obligations, ideally by at least prohibiting defined-benefits for government employees as well as serious pension ages in the public sector.

This list is long and more than demanding. But given that trust is weak following the mess we are in, these provisions should act as a strong commitment stick for every government that wants to seriously get out of the mess.

//Picture from Rainer Ebert under CC

What really surprised me, however, was the reaction to the crisis in Hungary. Undoubtedly, after the first shock wave has dealt (well…?) with by the big western member states, it became high time to turn east now. Here Hungary is worst hit so far, so a massive rescue package has been prepared over the last days (read FT). It consists of 12.2 bn Euro from the IMF, 1 bn Euro from the Worldbank (the already provided 5 bn Euro credit from the ECB) and 6.5 bn Euro from the EU. Now the latter point is really interesting because the EU is invoking article 119 to step in. Even more surprising to me is the (first ever?) issueing of “Euro bonds” to finance the EU’s side of the Hungarian rescue package. Making use of such bonds has long been the demand of UEF. But their consideration were circling more around a general infrastructure back-up and investment programme and less of a concern for crisis intervention. If the bond move works out, it could set a worthy precedence for future intervention.

Die Ratsverordnung “zur Einführung einer Fazilität des mittelfristigen finanziellen Beistands zur Stützung der Zahlungsbilanzen der Mitgliedstaaten” ist hier als PDF verfügbar.

Surely no other industry still plays such a symbolic role as the car industry inside Germany. At the same time no other industry sector (together with airlines) has been as blind on climate change as German car makers, which have consistently managed to gear up their fleets both in average engine power and CO2 emissions. But when the world and the European Commission finally start to take climate change seriously, we can see a very European pattern evolving. National champion industries (here: Germany’s car industry) send a big letter to the government – and all the EU has to stand still. How familiar, but how very European is this behaviour? – “All politics is local” they say.

Deutschland prefers secret Constitutional diplomacy

The take-over of another German, the new President of the European Parliament Hans-Gert Pöttering, was followed by another interesting lesson about the Germans. Apart from his veteran experience and knowing-by-heart of the Parliament’s rules of the game, “HGP” could also convince chancellor Merkel to be more present in plenary during her Presidency than any other Prime Minister before. This will hopefully go along with further-reaching reforms of the EP, including making its debates livelier and also taking up the seat issue.

But my point really is Merkel’s first speech in the plenary. For most of her speech she recalled some good European common sense about our common house – in as boring a way as a German can be. Yes, the Constitution, but please nothing promised. Her answers to the MEPs comments were more revealing. Firstly, she has her Sherpa’s ready and according to her they are of course the best option to discuss the way forward with the Constitution. Parliaments should better not be involved in this. Secondly, there was one thing she did not even bother to comment on – the idea of a European referendum. If you want to twist it into a positive direction, you can say that she keeps options open by not excluding it from the start.

Kommt Zeit, kommt Rat – kommt Referendum Kampagne

Luckily JEF and UEF have decided that we will not wait until Merkel’s Sherpa’s will fail or succeed, because we have always argued that we need a process that derives from the citizens – and not from bureaucrats. Therefore I am happy to see that our referendum campaign is already launched when the 27 Heads of State and Government come together on March 25 to discuss the blabla – äh – Berlin Declaration.

On March 17 we will prove that we do have a good amount of activists to give our campaign a fresh and good start.
Collecting one million signatures is surely ambitious but as we know from the ‘oneseat’ campaign it is not impossible. But first of all this campaign is about reaching out to civil society and the citizens – and to involve these in the fight for a European Constitution.

Let us show the Germans that their attitude is wrong – and let us show them on home territory at the campaign presentation in March as well as the campaign launch in Munich on April 20-21 that we are many; at least so many as to pressure the Germans out of their elitist attitude towards constitutional diplomacy.

Ambition defines Constitution

It has always been ambition which defined European success for bold steps ahead. Once again we as the federalist organisations should lead with ambition. Let us show that European citizens do care about their Europe.

Involving them in the collection of one million signatures until summer 2008 is not an easy game. But if we do not try, we cannot fail. And if we do not gear up the pressure for European democracy, we will also get what we deserve. I would prefer Europe over Germany.

Commissioner Wallström had invited this morning some of the big Brussels-based NGOs to a stakeholder discussion (among them JEF) on the Communication policy, the upcoming “Berlin Declaration” as well as the general way forward with the Constitution (at least this is what the invitation said). However, in their introductions Wallström and a surprise visitor Barroso focused on the Berlin declaration. The Commission president repeated the five issues he was presenting already in the EP last week in reply to Merkel’s presidency presentation: solidarity, sustainability, accountability, security and Europe’s global role.

The 20 or so representatives then commented on the Berlin Declaration, explained how important their issues are etc. Most of it was somehow expected, things I could pretty much agree with but without the concrete spice where I would have said that this is a thing I would find new. I guess poor Wallström and Barroso as well as their 10 or so staff were listening to these arguments not for the first time. After a couple of interventions – and as the last one before Barroso had to leave – I tried to take things from a more ambitious, institutional perspective. Here is roughly what I commented:

1. it is great to have the Commission president and Vice-president for this exchange. Something that would probably never happen in most member states.

2. what is really our story about this constitutional project? We had a story for Maastricht (singly currency), we had a story for Nice (enlargement) but the Constitutional Treaty – is it only to improve the work of the institutions? Given so much talk in this round about Europe’s new global responsibilities – why don’t we re-brand it into the Union’s foreign policy Treaty?

3. when it comes to the Berlin Declaration, we have to keep in mind what Joschka Fischer always said: think from the end of the process. – The reason for us still talking about the Messina Declaration is that it was followed up by a bold step of institutional reform, namely the Rome Treaties. We can draft the nicest declaration in Berlin, but for it to be remembered, we need to re-launch an ambitious constitutional project.

Contentwise I can agree with the five elements as proposed by Barroso. However, we need to make them concrete and give examples as where my generation shall be standing with Europe in 50 years time! – Why can’t we say that by then we only consume as many resources as we have in Europe? Why can’t there be one EU representation in 3^rd countries that I can call when I get lost in Congo?

4. on preparing the revision of the Constitutional Treaty: I completely agree with both Commission and Merkel, that we cannot start the process new and from scratch. But the Sherpa consultations are probably the most intransparent and least trustworthy process possible. How should any interested and involved actor find access to those people who by default operate outside direct public scrutiny? How would we know who to approach with our suggestions? Concretely, can the Commission not publish the names of all national Sherpas? Who are the Commission’s Sherpas?

5. regarding the ratification of the revised text, we could all read Wallström’s comments in the press about her position on a European referendum. But whatever we think about the idea, our ambition should always be to draft a text AS IF it were to be presented to public consultation. If we are even afraid of our own people, we should not even get into the work. Another important point is that it is an illusion to think that sticking to the old national ratification procedures is both faster and more convenient for national governments. Just remember that this is a process that already failed with Maastricht (Denmark), Nice (Ireland) and now the Constitutional Treaty. How fair is it to stop the process now with a big old member state saying while we ignore the voices raised by smaller member states?

Following my comments, Barroso summed up and supported mostly the comments on an ambitious global/foreign policy and argued that this has always been his key argument when telling his story about the Constitutional Treaty. He then argued (even refered directly to me), that he was even more ambitious than having a get-out-number from Congo, but he wants an advice line that helps me to establish myself in Congo which by 2057 should be a progressing country thanks to the EU’s help.

Even more he announced that João Vale de Almeida and Wallström’s chef de cabinet Rolf Annerberg are the Commission’s Sherpas in the process. This would be no secret but at least I was not aware of this until then.

After Barroso some more representatives voiced their opinions and it became interesting again when Wallström gave her final reply. Her first reaction was that “of course all Sherpas should be made public by the member states” for us to address them also in our national context. Regarding the Berlin Declaration she was quite realistic but I found it interesting to hear that she saw it as an opportunity to point at new policy areas and experiences that might be added to the Constitutional Treaty (rather than in the forms of Social Protocals as once suggested by Merkel). One main reason for somehow excluding the EP and the Commission from the talks, would be that there had to be renewed commitment from among the heads of state themselves.

Then came another point where she referred directly to me – by saying that indeed we need to think the process from the end.

All in all I found this to be a good meeting while I am particularly happy that both Barroso and Wallström were so explicitly commenting on some of my remarks – the concerns of JEF. Maybe this is because they were (sadly) the most concrete, or maybe because they were the most institutionally ambitious. But maybe it was also because I was (almost) the only younger person in this round of “experienced” civil society representatives. Who knows.

]]> http://blog.jan-seifert.eu/my-first-words-to-wallstrom-und-barroso/feed/ 3 http://blog.jan-seifert.eu/60-years-europa-union-altmaier-new-president/ http://blog.jan-seifert.eu/60-years-europa-union-altmaier-new-president/#comments Sun, 10 Dec 2006 17:01:47 +0000 Jan http://blog.jan-seifert.de/?p=10 This weekend was a good one for Europa-Union Deutschland (EUD). The 60 year anniversary of Europa-Union’s foundation in Syke in 1946 was celebrated in the very same village near Bremen yesterday. Apart from the less exciting but still positive remarks and contributions by various politicians (exclusively male!!), the real high point was a speech by Swiss Europhile Adolf Muschg. It has not happened very often that such a bright observer of European integration addresses our organisations. I was very excited about Muschg’s speech and its positive welcoming.

Sunday then saw the typical resolution business, panel debate (again all male) and Verbandsgeschäfte. But the real breakthrough for EUD and the years to come is the election of Peter Altmaier as new president. He is probably one of the most knowledgeble EU experts in Germany, he has always sticked to his European and federalist believes even when this did not always suit best his political career. But more than that I value his real commitment from the first times I met him. Back in and around 2002 he was of great help to establish and run the intergroup Constitution in the Bundestag. And on top of that was happy to hang out for beers with us afterwards. If any politicians has shown that he is a man of this movement (and beyond that a great friend of JEF), then it is Peter Altmaier. Congratulations to him for obtaining 97% of the votes and the trust of this organisation (some more information in EUD’s press release). JEF-Europe will happily work together you Peter in the months to come and we are looking forward to see him on our activities during the German presidency.

When I was sitting at the back-benches I was wondering why Altmaier stayed so close to our Bavarian Baron von Cetto. Have a look at this: