Sunday is obviously going to be “D Day” or something like it for the European Union. Leaders of all 27-member EU states will meet in Brussels to discuss concerns about growing protectionism and to examine ways to finance an all Europea economic recovery plan. On the table are two big issues:
a) What to do about eurozone member states who find themselves in difficulty.
b) What to do about the problems posed for the whole EU by the mounting problems in Eastern Europe.
On the first topic “our Angela” is clearly shifting from the time when the German Finance Ministry was simply denying “Der Spiegel Reports”, and is now saying that euro zone nations need to show solidarity towards each other in the current crisis, offering her strongest signal yet that Germany is prepared to help weaker members of the bloc. According to Reuters:
“We have shown solidarity and things will stay like that, but this must be on the basis of the commitments that form the foundation of our common currency,” Merkel said, when asked about possible German aid to fellow euro zone members.
Speaking at a news conference with the foreign press in Berlin, she referred directly to Ireland, which faces ballooning deficits, saying: “A country like Ireland .. is in a very different situation from a country that has fewer banks, such as Slovakia.” Germany has made clear it opposes the idea of a joint euro zone bond issue to alleviate financial pressure on fragile states in the bloc. But a consensus seems to be forming around some other form of aid, with strict conditions attached that would compel recipient countries to consolidate their budgets in line with the goals set out in the EU’s Stability and Growth pact.
On the second issue Merkel put out a call, which I wholeheartedly endorse, for East European states to be absolutely honest, and get all their economic bad news up and on the table, once and for all.
German Chancellor Angela Merkel said she expects an â€œhonest reportâ€ on the economic status of eastern European Union members at a summit on March 1. â€œWe need to remain attentive over the problems of the member states in eastern Europe,â€ Merkel told reporters in Berlin today. â€œYet for that we need them to speak openly about their problems.â€ â€œWe expect them to speak clearly at the summit this weekend,â€ Merkel said. â€œAlthough there are marked differences in the situation of those members we know that foreign banks are withdrawing capital.â€
Decisions need to be taken on Sunday, important decisions. The time for procrastination is over.
I have put forward extensive arguments on both these issues in my recent posts: