Social Europe: Not (yet) up to the task: how eurozone members are gambling away post-Covid economic recovery

Action at the European level is key to rein in the economic shockwave following the Covid-19 outbreak. As the former president of the European Central Bank, Mario Draghi, recently affirmed, economic recovery will be easier the more public treasuries step in and relieve the private losses of workers and firms. The goal is to ‘keep the lights on’— to prevent the production system sinking under the accumulating burden of debt and losses until workers can get back to work and consumers can buy again under safer conditions. [...]

While these measures allow public and private debt to increase, the Eurogroup was supposed to provide a final safety net for public finances as the linchpin of the package. Such a safety net would have to meet two bottom-line requirements. [...]

Stagnation and further macroeconomic divergence will be the most likely outcome. Besides the predictable upsurge of political discontent and populist temptations, financially weaker members will likely be subject to speculative attacks, and therefore be even more dependent on long-term ECB support than before.

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Social Europe: The Collapse Of European Social Democracy, Part 1

Instead, Social Democrats are being replaced by populists on the left and right. Identity politics based on gender, ethnicity, feminism and other single issues is taking precedence and minorities supported by SDs are pursuing their own agendas over broader communal interests. [...]

This power was irrevocably put to the the test when the financial system imploded and dramatic action had to be taken by governments of all colours. “We will do whatever it takes to save the Euro,” as Mario Draghi, ECB head, said in July 2012. Action was taken by states to save banks, huge private firms, economies and to regulate and reshape markets once more. [...]

Blair and Schröder favoured a more pro-market approach (‘Third Way’) and thus neglected to manage the rising dominance of finance. Their biggest mistake was in de-regulating finance at the precise time when they, as socialists, should have recognised that it was spinning out of control. The power of the state had been forgotten by European Social Democratic leaders. [...]

Another major issue raised by globalisation was fear of immigration. Whether real or imagined, these fears, usually exaggerated, were ignored by many SDs. They should be the protectors of the sovereign welfare state against its denigration by neo-liberals who wish to destroy it. It is the hard right which is shaping immigration policy as it gains power and many SDs parties (though not all) have tended to avoid the issue. Social Democrats, like many progressives, ironically appeared to take a free market approach to immigration, rejecting the kind of regulation they would normally seek in the labour market. This may have been because of a sense of decency to immigrants, but ignoring the issue has allowed exteme views to grow.

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Politico: Merkel changes target in quest for German EU dominance

“It’s certainly plausible that Germany has an interest because it has not held the Commission president post since Walter Hallstein in 1967,” said Elmar Brok, a veteran center-right MEP who also sits on the executive committee of Merkel’s Christian Democrats (CDU). [...]

Merkel’s preference would be to nominate her economy minister, Peter Altmaier, for the post. A longtime Merkel confidante who served as her chief of staff until last year, Altmaier, 60, worked for the Commission early in his career and speaks several European languages. [...]

Merkel’s rethink was spurred by the likely resistance her preferred ECB candidate, Bundesbank President Jens Weidmann, would face elsewhere in the eurozone. A monetary hawk deeply skeptical of some of the moves current ECB President Mario Draghi has taken to combat the euro crisis, Weidmann has earned a reputation as a hard-liner. [...]

Another question is whether Merkel would succeed in convincing the rest of the European People’s Party to support her candidate. Doing so could mean shoving aside Manfred Weber, the German leader of the EPP’s parliamentary group.

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Politico: Italy can’t get no respect

“The French think of Italy either when they have problems with Germany, or when Italy has an election that could spell trouble,” said Marc Lazar, professor of history and political sociology at Paris’ Sciences-Po university and president of the school of government at LUISS in Rome. [...]

As the crisis rolled into 2012, Monti briefly gained traction and Italy enjoyed a rare moment of EU influence, as the prime minister bounced Angela Merkel into embracing plans for a European banking union, easier access to the eurozone’s bailout fund and the possibility for the rescue fund to aid troubled banks directly. [...]

With a population size close to that of Britain and France, Italy has long punched below its weight in the EU, chiefly because of a chronically unstable political system with frequently changing governments and a weak public administration. The vicious circle of neglect fuels instability and Euroskepticism, which in turn makes it easier to ignore Italy. [...]

Italians have never held so mamy senior positions in European institutions, with four of the 33 seats around the EU summit table: Italian Prime Minister Paolo Gentiloni plus Draghi, European Parliament President Antonio Tajani and EU foreign policy chief Federica Mogherini. [...]

And Macron has moved to repair ties with Rome. He settled the shipyard dispute with a mutually accepted deal and promised a bilateral treaty to build Franco-Italian cooperation along the lines of the 1963 Elysée treaty that governs the Franco-German partnership.

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Politico: Why Mario Draghi’s success could galvanize critics

According to the ECB’s new economic forecasts, released Thursday, inflation in the eurozone could reach 1.7 percent in 2020 — close to the central bank’s near 2 percent target that it has been trying in vain to reach since 2013. As other institutions such as the International Monetary Fund and the OECD did in recent weeks, the ECB also upped its forecast for GDP growth in the eurozone to 2.3 percent next year and 1.9 percent in 2019.   [...]

But the ECB president, who has now entered the last two years of his mandate, could face in coming months the paradoxical situation of being criticized for pursuing policies that have succeeded — or are about to — to the point that his detractors want to stop them. [...]

But the hawkish wing of the governing council, led by German central bank chief Jens Weidmann, may seize on that as a proof that now is the time to get more aggressive in unwinding the loose-money policies with which Draghi has been associated ever since he took over in 2011. [...]

A major problem is that the ECB is running out of bonds to buy under the limits it set itself to avoid the type of “monetary financing” of governments banned by the eurozone’s founding treaty. To that effect, it cannot buy more than 33 percent of the debt of a given government — and never more than 33 percent of a specific bond issue.

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Social Europe: Macron’s Challenge For Europe

Macron’s speech was a welcome call to arms for a European Union that is confronting many crises and threats. But on the crucial and controversial question of fixing the eurozone, his proposals were disappointing. And he will have a hard time winning over his more cautious European counterparts, not least German Chancellor Angela Merkel, whose room for manoeuvre was crimped by her party’s poor showing in last weekend’s federal election. [...]

The ball is now in Germany’s court. Europe could very well succumb to nationalism if Macron’s plan fails. That would be devastating for Germany, a country whose economic success, political identity, and security are based on a strong, functioning EU.

Macron is the most pro-German French president imaginable, and he has boosted his credibility by pursuing difficult labor-market reforms and unveiling a Teutonically prudent budget. Germany would be committing a monumental strategic blunder if it did not engage seriously with his proposals. [...]

The danger now is that Macron will achieve only a token eurozone budget in exchange for even tighter controls on national budgets, which would prove economically harmful and politically poisonous. He would also miss his chance to enact the reforms that the eurozone actually needs. These include deeper financial-market integration; an easier process for writing down bank and government debts; greater fiscal flexibility; and more balanced economic-adjustment mechanisms.  

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Politico: Hail Schäuble!

Investors are also cheering Schäuble’s exit. (He’ll now preside over Germany’s Bundestag.) They hope that whoever replaces him will be more willing to spend the country’s large surplus, to the benefit of all eurozone members. Yet if anything, Schäuble’s departure introduces substantial risks. [...]

Despite his reputation, Schäuble is staunchly pro-European. The Liberal Free Democrats (FDP) — now most likely to claim the finance ministry given the recent election result — support more pan-European security and defense cooperation. But under its new leader, Christian Lindner, the party has veered sharply to the right on issues related to the eurozone, performing well with parts of the electorate as a result. [...]

Schäuble knew how to manage his troops and keep them in line, even as his government supported three bailouts for Greece and one each for Spain, Ireland and Cyprus. He was also able to keep an even keel when European Central Bank President Mario Draghi turned his institution into a fiscal backstop with his commitment “to do whatever it takes” to keep the eurozone intact in 2012. This went well beyond what most Germans believe the bank’s mandate should be.

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Politico: Tajani wants to turn European Parliament into a global stage

Accepted practice at present is that only heads of state can be invited by the president to speak to MEPs at the full session of Parliament in Strasbourg. But recently, MEPs have begun to bend their own unwritten rules and have allowed religious leaders and prime ministers such as Hungary’s Viktor Orbán to come and speak to MEPs. [...]

Tajani wants to encourage this trend and expand the group of people permitted to speak and debate with MEPs to include EU leaders such as Council President Donald Tusk or European Central Bank President Mario Draghi — in effect turning the Parliament into “the center of the debate” on the future of Europe, according to a document obtained by POLITICO. Crucially, he also wants MEPs to be able to quiz their guest speakers rather than just listening passively.  [...]

According to other documents obtained by POLITICO, Tajani’s conservative European People’s Party and the Greens group proposed in a recent meeting of the Conference of Presidents (the Parliament’s decision-making body) to invite Jerry Brown, the governor of California, to speak and debate with MEPs. [...]

MEPs have come in for criticism for not turning up in sufficient numbers when the Parliament has had high-profile speakers. In July, Commission President Jean-Claude Juncker called the Parliament “ridiculous” because the hemicycle was close to empty during a speech by Malta’s Prime Minister Joseph Muscat.

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