Saturday

17th Nov 2018

Opinion

Eurozone needs institutional reform

  • The eurozone can no longer function as it is today (Photo: guysie)

One year before the European elections in May 2019, the eurozone is facing a series of challenges related to its architecture and its structural weaknesses.

The current fiscal policy framework is ineffective, as it has strengthened social and regional disparities and increased fiscal gaps between the periphery and the powerful European North.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

Public investments are not increasing, tight fiscal policies are still resisting against the promotion of a robust growth model, and despite the relative stabilization and growth that eurozone has shown over the last couple of years, the roots and causes of the 2008 financial crisis have not been fully addressed.

The crisis in Italy is coming to intensify the pressure on institutional reform, for which we have heard a lot, but we have seen little.

The delay in pushing for the necessary changes in Eurozone architecture is not just worrying but it may further enhance the eurosceptic and populist bloc and further exacerbate the already intense disappointment of a large part of European citizens over the implemented policies.

In this context, there are also positive developments.

The new socialist government in Spain, led by Pedro Sanchez, the Costa government in Portugal and the Tsipras government in Greece are three very interesting progressive political projects.

All three leaders are attempting to reshape the political balances in the EU and eurozone and to step up efforts towards achieving sustainable development, social and regional convergence.

The key initiatives and proposals of the progressive bloc at the European Council and the European Parliament focus on changing the fiscal policy priorities and protecting the weaker social groups, while at the same time increasing the resources of the European budget, pushing for tax harmonisation, strengthening cohesion policies, addressing social inequalities, improving burden-sharing and risk management within the Eurozone.

No more neo-liberalism

To put it simply, these forces are against the neo-liberal austerity policies, and the extreme populism and far-right euroscepticism that has grown during the recent years in many member-states.

It is, thus, important for the eurozone to choose its direction and decide on its next policy path.

Dilemmas are specific, risks are imminent, as imminent are the proposals of each side. The proposals of Tsipras, Costa and Macron are moving towards convergence and can be considered as positive, while Merkel does not want to change the existing balance of power and alter the substance of the current fiscal policies.

The eurozone can no longer function as it is today.

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

Therefore, we have to change course, as we will find ourselves for another time confronted with everything that has led Europe to the financial crisis ten years ago.

Such a negative development would be painful for our societies and the European project altogether.

Dimitris Papadimoulis is vice-president of the European Parliament, and head of Syriza party delegation

Analysis

EU mulls post-Brexit balance of euro and non-eurozone states

Brexit will dramatically change the balance between EU members states that have the euro and those that don't. The thinking on the future of the eurozone is done at EU-27 level - but opposing camps will have to be reconciled.

US steps in to clean up Cyprus

Cyprus has overlooked undertakings on bank probity made to the EU in the context of the 2013 bailout - but it might prove harder to get the US off its back.

Macron's 'European army': why is everyone talking about it?

Few people commented on one key point in Macron's statement: he did not justify the idea of a European army by the need to intervene in Africa, which would have been France's traditional approach. Instead, he invoked the Russian threat,

News in Brief

  1. US warns EU banks and firms against trading with Iran
  2. Merkel urged Romania not to move embassy to Jerusalem
  3. Protesters call for Czech leader to step down
  4. Former German chancellor labelled 'enemy' of Ukraine
  5. French lead opposition to Brexit deal on fisheries
  6. Private accounts of Danske Bank employees investigated
  7. UK's May defends Brexit deal to MPs, after ministers resign
  8. Brexit MP calls for 'no confidence' vote on May

Why 'Spitzenkandidat' is probably here to stay

The power of the parliament to 'appoint' the president of the EU Commission is new, highly-contested - and not universally understood. In fact, even some of the lead candidates to replace Jean-Claude Juncker are against it.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSTheresa May: “We will not be turning our backs on the Nordic region”
  2. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  3. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  4. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  5. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  6. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  7. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  8. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  9. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  10. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  11. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  12. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs

Latest News

  1. Brexit dominates EU affairs This WEEK
  2. How the EU commission got tunnel vision on self-driving cars
  3. No-confidence calls against May put Brexit deal in doubt
  4. Key points of the Brexit deal (if it ever comes into effect)
  5. Romania heaps scorn on 'revolting' EU criticism
  6. US steps in to clean up Cyprus
  7. 'Decisive progress' on Brexit as British cabinet backs deal
  8. Asylum for Macedonia's ex-PM puts Orban on spot

Join EUobserver

Support quality EU news

Join us