Overzicht

Centre for European Reform

51 Artikelen
Achtergrond: Jay Huang (cc)
Foto: copyright ok. Gecheckt 09-11-2022

‘EU moet Victor Orban niet isoleren’

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De Hongaarse premier Victor Orban is weinig geliefd in Europa. Hij zou ondemocratisch zijn. Toch moet de EU ervoor waken hem en zijn partij teveel te isoleren, betoogt Balázs Jarábik, directeur van het Kiev office of Pact, Inc., een NGO voor de ontwikkeling van media en civil society in Oost-Europa.

Viktor Orban`s FIDESZ party won a constitutional majority in the Hungarian parliament two years ago on a promise of purging the country’s politics of the remnants of communism. The prime minister had a point: unlike neighbouring Central European states, Hungary had moved from communism through compromise, not revolution, so many of the old system’s worst traits including rampant tax evasion and addiction to debt have been preserved or worsened. When Orban promised to “complete regime change”, he had the backing of most Hungarians, even if many suspected the prime minister’s political instincts, and worried that he lacked a clear programme and a team with the expertise to reform the country.

Two years later, Orban is in open conflict with his country’s opposition and much of the West. Critics hold him responsible for a series of confusing, counterproductive and sometimes contradictory economic measures, such as the de facto nationalisation of the private pension system. They also suspect him of trying to build a one-party state. The EU, too, is alarmed, and the European Commission initiated court proceedings against Hungary, chiefly over measures that curb the powers of the country’s central bank. But the West should resist the urge to isolate Viktor Orban, as it does with Belarus’ Alexander Lukashenko. Orban has genuine support from the majority of Hungarians, who believe that the country is on the wrong track and needs deep reforms. While many of the prime minister’s steps have been undemocratic, Orban has proven to be a pragmatist, capable of adjusting course. The EU’s goal in Hungary should be to steer his government away from damaging undemocratic ideas towards needed reforms.

Foto: copyright ok. Gecheckt 27-09-2022

Rusland zit er niet helemaal naast in Syrië

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Rusland ligt onder vuur wegens haar blijvende steun aan Syrië, maar is de opstelling van Rusland echt zo vreemd? De Russen opereren slimmer dan de Westerse landen, die met lege handen aan de zijlijn staan, betoogt Edward Burke, research fellow bij het Centre for European Reform.

Russia has been roundly criticised for vetoing a draft UN Security Council resolution aimed at stopping the violence in Syria and ousting President Bashar al-Assad. Moscow is reluctant to give up on the al-Assad regime for the moment: it has a direct interest in the survival of the regime, which buys its arms and provides a naval base; it is strongly opposed to Western-led interventions, on principle; it believes that Arab revolutions are likely to lead to takeovers by Islamic fundamentalists; and it is still fuming that, after it refrained from vetoing UN Security Council resolution 1973 on Libya – about the protection of civilians – the West abused the resolution by using it to justify regime change.

However, Russian diplomats concede that change is inevitable if the violence in Syria is to be contained. Russia wants a managed transition that preserves its influence. The draft UNSC resolution called for the confinement of the Syrian army to barracks and endorsed the Arab League plan for al-Assad to hand over power to his vice president prior to the holding of elections. Russian diplomats are right to say that such a resolution would have been unenforceable and, if implemented, would have led to the sudden collapse of the Syrian government without a credible alternative to take its place. Anarchy could have ensued. The Kremlin may be playing realpolitik and taking pride in blocking the West, but it has a point.

Foto: copyright ok. Gecheckt 05-10-2022

Het echte probleem van Griekenland

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Het echte probleem van Griekenland is niet economisch. Het is de onmogelijkheid om te hervormen. Het stroprige en opgeblazen staatsbestel maakt iedere poging tot verandering een Herculische taak en maakt iedere politieke belofte bij voorbaat een loze, stelt
Katinka Barysch, deputy director van het Centre for European Reform.

The German idea of sending Athens a ‘budget commissioner’ was daft. Berlin itself could not tolerate such interference in its fiscal sovereignty (the constitutional court would never allow it). But to restrict such budgetary oversight to Greece alone would be disdainful and a political non-starter. The idea predictably caused outrage in Greece. Chancellor Angela Merkel has quietly dropped the proposal but the underlying problem persists: Greece’s donors – not only Germany but also other EU governments and the IMF, no longer trust Greek politicians to turn their country around.

Greece desperately needs a deal on a new bail-out package before March 20th when €14.4 billion in debt repayments are due. The IMF and eurozone governments insist that new money will only be forthcoming if there is a realistic prospect of Greek debt becoming sustainable in the foreseeable future. The IMF says that ‘sustainable’ would mean a debt level of 120 per cent of GDP by 2020 – although most economists think that 60-80 per cent is the most that a weak economy like Greece could cope with.

Foto: Sargasso achtergrond wereldbol

Weinig bereikt op eurotop

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De eurotop lijkt succesvol, ondanks het machteloze gestamp van Engeland. Toch zijn de echte problemen nog steeds niet aangepakt, denkt onderzoeker Simon Tilford. Misschien zijn de problemen juist vergroot door nog meer politieke instabiliteit te veroorzaken.

The UK’s decision to marginalise itself by vetoing a new EU-27 treaty has dominated the post-summit media coverage. And for good reason – it could prove a big step towards UK withdrawal from the EU. However, the bigger question is whether the agreement reached at the summit will do anything to address the fundamentals of the euro crisis.

Unfortunately, the news on this point is just as bad. This summit will go down as yet another missed opportunity. Despite rhetoric to the contrary, the summit suggests that policy-makers have not yet taken on board the seriousness of the eurozone’s predicament. There was no agreement to close any of the institutional gaps in the eurozone, such as the lack of either a real fiscal union or a pan-eurozone backstop to the banking sector. There was no agreement to boost the firepower of the European Financial Stability Fund (EFSF), while the move to beef up the IMF’s finances fall far short of what is needed. As a result, there is little to prevent a further deepening of the crisis.

Foto: Sargasso achtergrond wereldbol

Engeland zet zichzelf buitenspel

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Het dwarsliggen van Engeland op de eurotop kan het land nog wel eens duur komen te staan, denkt Charles Grant, onderzoeker bij het Centre for European Reform.

The outcome of the Brussels summit on December 8th and 9th is a disaster for the UK and also threatens the integrity of the single market. For more than 50 years, a fundamental principle of Britain’s foreign policy has been to be present when EU bodies take decisions, so that it can influence the outcome. David Cameron, the prime minister, has abandoned that policy. Britain will not take part in a new fiscal compact that most other EU countries will join.

France and Germany have persuaded the other eurozone countries that treaty changes are needed to enshrine stricter budget policies and closer economic policy co-ordination. The new procedures would apply only to countries in the euro. Most member-states wanted to enact those reforms through amending the existing EU treaties. That would ensure that countries in the euro, and those outside, would be subject to a single set of rules and institutions.

But Britain blocked that deal, pushing France, Germany and most other member-states to proceed with a new treaty, to sit alongside the EU treaties. The new treaty may face difficulties: the Irish may hold a referendum on it and could easily vote no. But Paris and Berlin are determined to press ahead with the fiscal compact and if the Irish vote against it they are likely to find themselves excluded.

Foto: Sargasso achtergrond wereldbol

Er tikt een tijdbom onder de wereldeconomie

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Terwijl alle ogen gericht zijn op de kapitaalposities van banken en overheden, missen we een belangrijk gevaar voor de wereldeconomie: verstoorde handelsbalansen tussen landen. Die zullen een toenemend protectionisme uitlokken, met mogelijk desastreuze gevolgen, betoogt Simon Tilford, chief economist at the Centre for European Reform.

The developed world’s slide into recession threatens an outbreak of protectionism. Unlike in 2008, governments now have few tools with which to combat a renewed economic downturn, which raises the likelihood of it developing into a slump. If so, protectionist pressure is certain to build. The country that moves first to erect trade barriers will no doubt take the blame for the resulting damage to the trading system. But the real villains will be the countries that skew their exchange policies, tax systems and industrial structures to gain export advantage. The irony is that the countries that are most dependent on free trade – those that produce more than they consume – are the biggest obstacle to a sustained recovery in the global economy. They need to change course before it is too late: all will suffer if countries move to erect new trade barriers, but the surplus economies will suffer most.

Surplus country governments regularly exhort deficit countries to pay-down debt, save more and ‘live within their means’. But the real problem facing the global economy is an acute lack of aggregate demand. The world is awash with savings, but there is a dearth of profitable investment opportunities, which in turn reflects the weakness of consumption. The answer is not therefore for everybody to save more. This will be disastrous: it will further depress consumption and hence investment, and aggravate fiscal problems. If countries with big trade deficits (and correspondingly high levels of indebtedness) are to save more, surplus countries (those that live within their means) will have to save less and spend more.

Foto: Sargasso achtergrond wereldbol

Europa heeft hogere inflatie nodig

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Europa heeft hoge nood aan groei. Je kunt vraagtekens zetten bij het bezuinigingsbeleid van veel Europese overheden, maar ook bij de obsessie van de ECB met inflatie. Inflatie kan juist een uitweg zijn uit de huidige malaise, betoogt Simon Tilford, chief economist aan het Centre for European Reform.

The biggest challenge facing the eurozone is how to generate economic growth. Whatever its leaders agree in terms of fiscal targets and surveillance will achieve little in the absence of growth. Excessively restrictive fiscal policy is clearly one obstacle to such growth, but the European Central Bank’s obsession with inflation is another. Of course the central bank must guard against excessive inflation, but it is a big problem when its fear of inflation blinds it to the much more serious threats confronting the eurozone economy. Indeed, somewhat higher inflation may be part of the solution to the crisis facing Europe. If policy continues to be directed at ensuring inflation of “below, but close to 2 per cent”, countries such as Spain and Italy will struggle to regain competitiveness within the eurozone and their debt burdens will be unsustainable.

The Bundesbank’s legacy is clearly visible in the ECB’s official strategy. The central bank’s interpretation of price stability means it has the most restrictive target or ‘reference value’ of price stability of any major central bank. Given that many eurozone countries have historically been prone to high inflation, the ECB’s determination to build a reputation for guaranteeing price stability is understandable. Officials from the bank never tire of saying that ensuring low inflation is the best contribution the ECB can make to economic growth. Price stability is important, of course. But a reference value of under 2 per cent and no accompanying mandate to ensure an adequate level of economic activity (such as that faced by the US Federal Reserve) is too restrictive. It is damaging in a number of ways for a currency union such as the eurozone.

Foto: Sargasso achtergrond wereldbol

Eurocrisis: het eindspel

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Simon Tilford, chief economist at the Centre for European Reform, haalt uit naar Nederlandse en Duitse politici. De EU houdt wel erg weinig middelen over om de crisis te bestrijden.

Eurozone policy-makers, especially German and Dutch ones, have been unable to rise above hubris and moral posturing, leaving the eurozone with very little ammunition to confront the coming financial storm. They have stubbornly dug in their feet, preferring to deepen the crisis than to admit their mistakes. This makes a fracturing of the eurozone almost inevitable. And it will not simply be Greece (and possibly Portugal) leaving, as some German and Dutch policy-makers appear to think. This is wilfully naive. This threat goes right up to and includes France. A ‘core’ could be very small indeed, comprising just Germany, the Netherlands, Austria, Finland and Luxembourg. France and Germany would no longer share a currency.
The eurozone has opted to deny itself the policy tools to deal with the crisis: there will be no debt mutualisation, even one accompanied by tight fiscal rules; the European Central Bank (ECB) will not be permitted to exercise the full range of lender of last resort functions (for example, to buy unlimited volumes of sovereign debt or other financial assets); there will be no co-ordinated recapitalisation of eurozone banks; and economic policy will be driven by faith, not reason (leading eurozone policy-makers believe that uncoordinated, simultaneous cuts in public spending allied to tax increases, will boost household and business confidence). This is the kind of thinking that caused economic slump in the 1930s, and with it the rise of political extremism.

Foto: Sargasso achtergrond wereldbol

VS en Europa moeten Palestijnse wens steunen

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Een ander geluid dan Abu Pessoptimist: de VS en Europa moeten de Palestijnse wens juist steunen, betoogt Clara Marina O’Donnell.

For months, the US and the EU have tried to discourage the Palestinians from asking the UN to recognise the state of Palestine. On both sides of the Atlantic, governments are concerned that the UN bid will exacerbate the conflict with Israel. But so far, American and European efforts have failed. Instead Washington and its EU counterparts should exploit the Palestinian initiative. If framed constructively, UN recognition could actually strengthen the prospects for peace.

Since spring, Palestinian President Mahmoud Abbas has been planning to ask the UN to recognise a state of Palestine based on the 1967 borders, and grant it UN membership in September. Abbas is portraying the initiative as part of a campaign of non-violent protests against Israel, designed to make headway towards a two-state solution at a time when peace talks have stalled.

The UN bid is very popular amongst the Palestinian population and it has gained support from numerous countries, including those in the Arab League. But the US and several EU governments worry that UN recognition would only make peace harder to achieve. Israel is already threatening to sever all assistance and contact with the Palestinian authorities out of concern that they will use recognition to pursue claims against Israel at the International Court of Justice. Furthermore, emboldened Palestinian grass roots movements and Israeli settlers might try to reclaim land from each other in the West Bank, triggering unrest and potentially violence.

Foto: Sargasso achtergrond wereldbol

Europa zal meer in Defensie moeten investeren

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Tomas Valasek denkt dat de Verenigde Staten zijn overzeese militaire capaciteit flink zal afbouwen in de komende jaren. Dat betekent dat Europese landen de haast automatische bezuinigingen op Defensie moeten stopzetten en zelfs extra geld ervoor moeten reserveren.

For decades, European countries cut defence budgets with little worry. The United States kept enough troops on the continent to deter all potential enemies, almost irrespective of how small European militaries became. But the US contingent has been steadily shrinking, and the pace of this downsizing now seems certain to accelerate because of the economic crisis. The Europeans should be worried – yet they will probably respond by hastening their own defence cuts.

The July 31st agreement under which US Congress increased the ceiling for national debt cuts defence spending by $350 billion over the next ten years, White House calculations say. However, the deal also calls for a joint committee of six Democrats and six Republicans to find ways to decrease the deficit by another $1.5 trillion. The lion’s share of those reductions is certain to come in the form of expenditure cuts (as opposed to tax increases). And these further cuts – even if spread across government departments – will include significant reductions in the Pentagon budget, beyond the $350 billion that it is already scheduled to lose. Military spending now consumes more than 20 per cent of the total federal budget (for comparison, in the UK the figure is 6 per cent). Assuming that the joint committee makes roughly proportional cuts among government departments, the Pentagon will lose another $250 billion; this would put total reductions in military spending at $600 billion over ten years.

Foto: Sargasso achtergrond wereldbol

Kan de verspreiding van de eurocrisis worden gestopt?

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Een bijdrage van Philip Whyte, senior research fellow at the Centre for European Reform.

Ever since the EU and the IMF ‘bailed out’ Greece in May last year, the eurozone has fought a desperate rear-guard battle to stem contagion to other countries – with little success. Ireland and Portugal have since been bailed out, and Cyprus could be next. The most disquieting development, however, has been incipient contagion to larger economies like Spain and Italy. Unless this contagion is arrested, the eurozone could face a potentially terminal crisis. For the past year, the Spanish government has been battling valiantly to persuade financial markets that it will not be the next domino in the chain. But the change in sentiment towards Italy has been more recent – and is perhaps more alarming. What explains it?

Until early July, Italy had just about convinced the financial markets that it was not the ‘next Greece’. A cynic might justifiably wonder why. The country’s structural problems, after all, are as profound as they are well-known. It has a rapidly ageing population. Its ratio of public debt to GDP is the second highest in the eurozone (after Greece). Productivity has barely risen over the past decade. Rising wages have consequently pushed up unit labour costs, eroding the country’s trade competitiveness. Governance, moreover, is notoriously weak: because of the dysfunctional nature of the political system, few eurozone countries have done less in recent years to improve the supply-side performance of their economy.

Foto: Sargasso achtergrond wereldbol

Marine LePen and the rise of populism

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By Charles Grant, director of the Centre for European Reform.

Since becoming leader of France’s Front National in January, Marine Le Pen has started to shift her party away from the far right. She has not only dropped the overt racism and Islamophobia of her father but also adopted hard-left economic policies. “Left and right don’t mean anything anymore – both left and right are for the EU, the euro, free trade and immigration,” she said when opposing me in a recent dinner debate on the future of Europe in Paris. “For 30 years, left and right have been the same; the real fracture is now between those who support globalisation and nationalists.”

The debate – organised by The KitSon, a Paris think-tank – was off-the-record. But I can repeat some of her comments, since they echoed what she had already said on-the-record elsewhere. She is a tall, strong-looking woman and an effective debater. She speaks pithily and sometimes with humour.

She presents her party as a nationalist force – in British terms, the United Kingdom Independence Party rather than the British National Party. In its hostility to the EU and to immigration, the Front National has much in common with Austria’s Freedom Party, the Danish Peoples’ Party, the True Finns, the Sweden Democrats and Geert Wilders’ Party for Freedom in the Netherlands. Populist, illiberal parties are flourishing in the most sophisticated, liberal societies of Northern Europe.

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