11th Aug 2022

Stop blaming ECB and euro, Almunia tells France

EU economic and monetary affairs commissioner Joaquin Almunia has said France should stop criticising the European Central Bank's interest rate policy and instead improve its unit labour costs and productivity.

"There are good reasons to be concerned about the development of the euro's exchange rate, but it's not possible to explain all the problems that have to be tackled by the eurozone in terms of the exchange rate", Mr Almunia told the Financial Times on Wednesday (26 September).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

He added that "some member states need to pay attention to the evolution of unit labour costs and productivity" instead.

Mr Almunia's comments come in response to president Nicolas Sarkozy's repeated criticism of the Frankfurt-based central bank – comments that have not been going down well in several EU capitals, particularly Berlin.

The French president keeps pushing the ECB to intervene against the continuing growth of the euro by cutting interest rates, claiming the strong currency is damaging France's exporters.

On Thursday (27 September), the euro has reached a new all-time high against the US dollar - one euro was buying 4.189 dollars.

But France has failed to find allies to push through a change to the ECB statute and to establish political control of eurozone interest rates, with Mr Almunia now objecting by setting Germany as an example.

"One can't explain France's trade deficit vis-à-vis Germany in terms of the exchange rate", the commissioner said, pointing out that German exporters are at present flourishing in global markets despite the euro's strength.

Brussels also gave a veiled warning in response to Mr Sarkozy's decision to draw back from a commitment his country gave in April to balance its deficit by 2010 - something that has become clearer since France unveiled its 2008 budget earlier this week.

"France and Italy are saying they're having difficulty in meeting the medium-term objective agreed in April. We're saying 'yes, it's not easy, but you should stick to the agreement'", Mr Almunia said. But he added that he would not yet take the formal step of issuing a warning notice to Paris on its budget.

Concerns over wealth funds

At the same time, the commissioner indicated that Brussels will respond to fears in some EU capitals, mainly Berlin and Paris, over sovereign wealth funds' investments from Asia or Middle East where assets worth hundreds of billions of dollars world-wide are amassed and possibly threaten the Union's strategic business areas.

"We have good reasons to ask these funds to declare what kind of assets they want to invest in, what criteria they apply to decide their investments, and what the distribution of their investments is", Mr Almunia told the Financial Times.

"If they don't agree to these criteria, we can find good reasons to react in some cases, where these funds try to invest in some strategic sector or try to move towards some specific industries," he added.

He suggested trying to find a balance between transparency and establishing proper control over such funds.

"We should avoid protectionist attitudes against these funds. But at the same time we should request the managers that are governments, or agents on behalf of the governments, to be transparent", he said.

Chinese 'currency swap' would further strengthen euro

If China was to gradually replace its dollar reserves with other currencies such as the euro, a further rise of the common European currency against the dollar will take place, experts warn.

Almost two-thirds of Europe in danger of drought

Data released by the European Drought Observatory show 60 percent of Europe and the United Kingdom is currently in a state of drought, with farming, homes and industry being affected. Drought conditions have also led to an increase in wildfires.

Droughts prompt calls to cut water use amid harvest fears

With the prolonged lack of rain and high temperatures, fears have emerged over water shortages and droughts decreasing crop yields — prompting calls to use less water and reuse urban wastewater for agricultural irrigation.

EU 'must tax pesticides' to cut use, expert warns

The European Commission put forward a new proposal to reduce pesticides in mid-June. But experts warn that it is based on weak rules, and that European agriculture is stuck in a "permanent pesticide-dependence."

Brazil pitches itself as answer to Ukraine war food shortages

Brazilian president Jair Bolsonaro is pitching his Latin American country as the answer to the world food crisis following the war in Ukraine. The traditional wheat importer has now exported three million tonnes of the grain so far in 2022.


Exploiting the Ukraine crisis for Big Business

From food policy to climate change, corporate lobbyists are exploiting the Ukraine crisis to try to slash legislation that gets in the way of profit. But this is only making things worse.

News in Brief

  1. Sweden overtakes France as EU's top power exporter
  2. Italy's far-right star in European charm offensive
  3. Another migrant tragedy claims 50 lives in Greek waters
  4. Russia hits area near town with 120 rockets, says Ukraine
  5. UN expects more ships to get Ukrainian grain out
  6. Greece to end bailout-era oversight
  7. Denmark to train Ukrainian soldiers in urban warfare
  8. Russian helicopter flies into Estonia's airspace

Stakeholders' Highlights

  1. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  2. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  3. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022
  4. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  5. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  6. Council of the EUEU: new rules on corporate sustainability reporting

Latest News

  1. Russian coal embargo kicks in, as EU energy bills surge
  2. Only Western unity can stop Iran hostage-diplomacy
  3. Kosovo PM warns of renewed conflict with Serbia
  4. EU Commission shrugs off Polish threats on rule-of-law
  5. EU urged to stop issuing tourist visas to Russians
  6. Russia puts EU in nuclear-energy paradox
  7. Almost two-thirds of Europe in danger of drought
  8. West needs to counter Russia in Africa, but how?

Join EUobserver

Support quality EU news

Join us