The stability pact

No one here have said anything about the recent unraveling of the stability pact. That felt after a little weird after seeing that US bloggers Daniel Drezner and Atrios, of all people, have both commented on the issue.

(Edward did write about it on Bonobo Land though)

Drezner links to this article from the Economist, which is a must-read, it says just about everything I might have said.

One thought on “The stability pact

  1. It hardly augurs well for the EU Constititon when EU member state governments can unilaterally choose to ignor any rules they have signed up to but later find inconvenient and substitute political fixes instead – and btw I thought that was the main burden of their complaint against the Bush administration in America in starting the Iraq war without UN approval.

    Besides, there was and is a good rationale in the EU Stability and Growth Pact of 1997 for restricting the size of national fiscal deficits to 3% of national GDP:

    “The idea was that debts would have to be controlled in a currency union. If there were no rules, then countries might feel free to run up higher debts in the knowledge that they would be bailed out by other countries in the euro zone.” – from:
    http://www.euobserver.com/index.phtml?sid=9&aid=13686

    That was the position of Duisenber, the retiring president of the European Central Bank (ECB): “the danger [of unravelling the Pact] is certainly there and that would be a disaster for Europe. And I do hope, and I am sure the ECB will do everything it can to uphold, to keep upright, the Stability and Growth Pact, which now is certainly under strain” – from: http://www.euobserver.com/index.phtml?sid=9&aid=13336

    Trichet, the incoming ECB president, takes the same position: “In comments with hardline undertones, Mr Trichet said that the three percent ceiling of the EU’s Stability Pact – which France and Germany have both breached – ‘must not be placed in doubt’.” – from: http://www.euobserver.com/index.phtml?sid=9&aid=13446

    If it is now being seriously claimed that neither Duisenberg nor Trichet really understand what they are talking about, that hardly says much for the management of the European Central Bank or for the credibility of the Euro as and when the currency comes upon challenging market conditions downstream. It seems those EU states which have chosen to opt out from the Euro currency union really did make wise choices.

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