Comment: Playing 'chicken' with Europe’s economy
Guest writer Ronnie Smith gives his view on the high level political and economic games coming up in the next weeks and the potential effect on Romania of this high-power ''game of chicken''.
In the next few weeks the British Prime Minister, David Cameron, following conversations with US President Barack Obama, will campaign to persuade the German Chancellor, Angela Merkel, to allow financial measures to encourage growth in the Eurozone and the European economy as a whole. Growth in Europe’s economy is extremely important to both Cameron and Obama in their attempts to rescue their own economies from deep crisis.
Mr Cameron and Mrs Merkel will have talks in Berlin today and will meet again at the G20 summit in Mexico next week. Mr Cameron will continue to press his case at the EU's summer summit in Brussels at the end of this intense month of economic politicking. There is added, almost humorous, interest in this because Britain is, of course, not in the Eurozone and the policies that Mr Cameron is pushing Mrs Merkel to adopt run counter to his own government’s fiscal priorities in the UK.
Mrs Merkel will resist the US/UK campaign for two reasons. The German view is that the European financial system, particularly the Eurozone is not yet ready for, or capable of, prudently providing a huge new round of central stimulus spending. Particularly since the financial health of many countries continues to teeter on the edge of economic and political disaster. This is a matter of judgment and there are conflicting views across the continent.
Perhaps of more immediate importance is Germany’s continued use of the crisis to frighten Eurozone members into quickly accepting a policy of comprehensive fiscal union. Chancellor Merkel’s position is extremely important because Germany is clearly the strongest member of the EU and no economic or financial initiatives can be taken without German support. She is very unlikely to accept the growing calls for continental economic stimulus until the deal for comprehensive fiscal union, with or without some form of British participation, has been signed and sealed.
Germany will dominate the policies and institutions of any fiscal union and they have now increased the pressure by proposing the creation of a federal fiscal authority that would centralize policy for all member states, providing evidence of their confidence in this game of chicken. The stakes in the game are now extremely high and Germany seems to hold most of the cards as everyone needs their help in getting any form of economic plan started, but only on German terms.
But remember, fiscal federalism will have massive political consequences for every member state. Even more power will be taken from national parliaments and given to unelected institutions in Brussels and Frankfurt (and Berlin). Have the Germans included initiatives to ensure any democratic accountability and oversight of those institutions? No.
If Mrs Merkel wins her game of chicken, Romania will have even less control of its economic and fiscal policy than it has now, on a permanent basis. Almost impossible to imagine, isn’t it?
By Ronnie Smith, guest writer
Ronnie Smith is Scottish and now lives in Romania, working as a professional training business consultant and communication coach. He is also a teacher of political science, a political and social commentator and a writer of fiction. The views expressed are his own and do not necessarily reflect those of Romania Insider.com.
(photo source:bundeskanzlerin.de. President Obama (at left) and the British Prime Minister David Cameron (bottom right) greet the Chancellor as participants gather for the traditional family photo.)