Author Archives: P O Neill

About P O Neill

is Irish and lives in America.

They all want to meet him

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An interesting wrinkle for those who care about summitry: Barack Obama’s visit to Europe in April will include Prague for what is being billed as the annual EU-USA summit.  Normally this includes just the Commission, the USA, and the Council Presidency which of course is the Czech Republic at the moment.   Last year’s summit was in Slovenia in June so they seem a little ahead of schedule.  But more importantly, it won’t be just the 3 leaders –

After consulting the European Commission and the U.S. administration of President Barack Obama, Mirek Topolánek will invite the highest representatives of all 27 EU Member States to the EU-USA Summit.

Thus it’s going to be a big show, but presumably at the expense of getting much done with 28 heads of state/government and the Commission in attendance.  It will get in a lot of “grip and grin” handshake photos for Barack Obama.  Is this the format that the Obama team wanted to make worthwhile a visit to a “small” state?

Euro 2012 to be funded by Arab states of the Gulf?

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Has the global financial crisis crossed yet another threshold with indications that the financing of the Euro 2012 Championship could be imperilled?  The successful joint bid of Poland and Ukraine looked on one hand like a smart move to recognize the eastern European fan bases but on the other like a gamble given all the costs that the tournament brings, not least in stadium upgrades.   And with money tight for everything, money for football was perhaps going to be a tough sell.   Hence this interesting Polish courtship of Kuwait –

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Alternative history

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Poland is proposing that the time that a Euro-aspiring country should spend in the exchange rate stability test of the Maastricht criteria be shortened i.e. that it not be as long as two years in the ERM-2 before becoming eligible for the euro.  Note that had such a relaxation been in effect from the start, the UK might already be in the Eurozone, since Black Wednesday hit during the ERM-2 phase of sterling, when the UK already was very close to the 2 year requirement.  Of course pre-Euro is different from post-Euro but one does wonder what the EU would look like with the UK as an ERM and then Eurozone country in the original group.

For the EU summit agenda

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One of the original motivations for tomorrow’s EU summit was the perception that Nicolas Sarkozy’s aid plan for French carmakers was in effect encouraging them to preserve production in France at the expense of Slovakia and other central European countries.  In that light, how should one interpret the following apparently likely sequence of events: Government of Germany takes equity stake in Opel; Opel sells one of its German factories to Daimler, and Daimler aborts a project to build a new factory in Hungary since it will now have the extra German capacity?

Will it be a different world on the Ides of March?

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The next 2 weeks look like they will be critical in determining the global policy response to the financial crisis.  Events are moving faster than any long-scheduled summit (such as G20 in April, let alone G8 in Sardinia in July) can hope to maintain their relevance.  One interesting element of the response is that the multilateral financial institutions appear to be acting to the maximum of their existing mandates even as the politicians talk about revisiting their mandates and functions.  

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How close is Ireland to crisis?

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Close enough that prominent people are raising the spectre of capital account flight already underway.  Today saw a bleak op-ed in the Irish Times by former European Commissioner and GATT/WTO head Peter Sutherland.  Now Sutherland arguably got his hair singed on the other side of the crisis as a RBS Director (a position relinquished a few weeks ago).  His key point is that a crisis could originate not from directly within the public finances (at least the finances as they were) or from bad loans of banks but from a loss of bank deposits and in that sense very much an emerging market style of crisis –

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Serbia knocking on IMF door

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It’s reported today from Belgrade that the government of Serbia intends to ask the IMF for a fairly substantial program loan of around $2 billion (which would be a scaling up of a precautionary $500 million facility already in place).  One striking thing about the rationale for the request is the speed in deterioration of prospects that it signifies.

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Let’s make it G21

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Everyone still calls it the G20.  But perhaps as a result of all the Spain blogging here :-) Spain is again invited to the G20 summit despite not being a formal member; in November in Washington it was apparently done as a wheeze involving the EU seat at the table, but this time the UK as G20 chair has simply invited Spain without going through any technicalities.  It’s a sensible decision, but one which highlights the membership threshold problems that any such group faces.

A year is a long time in economic forecasting

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The European Commission today released its assessment of the Stability and Growth (optimistic words these days) Programmes of 17 EU member states.  The news was in 6 of them, where in addition to issuing “invitations” to the governments to make adjustments, it initiated excessive deficit procedures for them as all had deficits exceeding 3% of GDP in 2008 and couldn’t use the usual excuses for doing so.  The six are Ireland, Greece, Spain, France, Latvia, and Malta.  There’s a lot of data in the report and nice summaries of the overall growth and fiscal position in each country but a few stand out.  

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What the IMF said about the UK in 2006

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It’s interesting to look back at international financial surveillance in the run-up to the global economic crisis and look at which risks were foreseen and by whom. 2006 is highly relevant, because it was the last full year before the crisis (which blew up in late summer 2007).  Below is a couple of paragraphs from the IMF’s surveillance report for the UK in 2006 relating to financial sector supervision.  Remember this is the system that was created by, and ultimately overseen by, Gordon Brown.

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