Euro area lacking single voice abroad, Brussels says
LUCIA KUBOSOVA
08.05.2008 @ 09:24 CET
EUOBSERVER / BRUSSELS - In a review of ten years of the euro, the European Commission argues the single currency has often suffered from political attacks in countries where it is used, as well as from lacking sufficient weight on the world stage, which Brussels suggests the 16-member to be eurozone could overcome with a single chair at international financial institutions.
Eurozone would gain from a more united front in its dealings with the outside world, argues the commission (Photo: European Community)
The euro - established by the then EU leaders ten years ago this month and launched on 1 January 1999 - has been an "unarguable political and economic success," EU economic and monetary affairs commissioner Joaquin Almunia told the European Parliament on Wednesday (7 May).
He added however that the public image of the single currency "does not always enjoy the reputation it should do," partly because it frequently becomes a scapegoat for economic problems of individual member countries.
In a report adopted by the EU executive on Wednesday, Brussels highlighted the key economic achievements of the euro area, such as "sustained price stability," a fall in average interest rates from nine to five percent, better fiscal policies and creation of 16 million jobs since 1999.
But economic growth has on average been around two percent per year since the introduction of the single currency, broadly the same rate as in the 10 preceding years, the paper acknowledged.
"Growth has been weak in countries where structural reforms in product and labour markets have been lagging. Such slow pace of reform perhaps reflects the fact that the single currency has provided a shield against adverse shocks, which generally act as a stimulus to reform," noted the paper.
Brussels argues that "This paradox can only be resolved by strengthening the co-ordination of structural reform in the euro area." The commission itself will soon gain more powers to boost its surveillance of the national reform performances.
Under the EU's Lisbon treaty - set to come into force early next year if ratified in all 27 member states, the commission will be allowed to send "direct warnings" to countries seen as failing in reforms, without having to wait for the bloc's finance ministers' approval.
Apart from improvements on the internal front, the EU executive also calls for a better coordination of eurozone members when speaking to the outside world, with Mr Almunia noting it is "absolutely necessary" for them to have "one single presence" in international financial bodies.
At the moment, it is individual countries rather than the eurozone as a bloc who are represented at institutions such as the International Monetary Fund and the G7 group of leading industrialised nations, with the biggest countries enjoying the highest status.
And although continually urging for a single voice and chair at international bodies for the eurozone, the commission is aware it is not yet politically acceptable.
"We're aware that it's not for today, tomorrow or probably the day after either. Politically, it's delicate, but we have to do it as a medium- to long-term goal because otherwise we're a political dwarf and an economic giant," a senior official said on Tuesday.
The euro area currently includes 15 countries, with Slovakia set to join on 1 January 2009 after it received a green light from Brussels on Wednesday.
