A United States Of Europe Is Not The Answer: German Federal Finance Minister Wolfgang Schaeuble

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WOLFGANG SCHAEUBLE

A United States of Europe 'is not the answer'

THANONG KHANTHONG,

ACHARA DEBOONME

THE NATION

BANGKOK: -- German Federal Finance Minister Wolfgang Schaeuble advocates further integration of Europe to resolve the severe crisis, but not to the point of surrendering sovereignty.

"The crisis has shown that we have to strengthen integration in some specific areas - in fiscal policy, in economic policy in general, in banking regulation and supervision... but, clearly, we are not creating the United States of Europe," Schaeuble said in written answers to The Nation’s questions.

The answers were sent from Berlin before he headed to Tokyo for the IMF/World Bank annual meetings. Tonight, he will be the keynote speaker at the Second Bank of Thailand Policy Forum, talking on "Asia and Europe - What we can learn from each other: Towards an economic policy model for the future".

His view opposed that of European Commission President Jose Manuel Barroso, who said last month that a "federation of nation states" would tackle common problems in Europe. He called for the sharing of sovereignty and for moving towards full integration. A drive towards a federal Europe, which would then force the 17 countries using the euro and 10 others to come under the power of politicians in Brussels in the way all 50 US states are under the federal government in Washington DC, is feared to lead to more complex divisions across the continent.

Deeper integration is expected, since the European Union became the 24th organisation in Nobel Peace Prize history since 1901 to win the highly-lauded award in 2012 for having "over six decades contributed to advancement of peace and reconciliation, democracy and human rights in Europe".

"European integration is not about building a federation, a 'superstate' or a new empire," Schaeuble said.

"As I said, you will not find an equivalent for it in the world or in the history books. As a model, it is innovative, flexible and therefore future-proof because it always seeks to address the problems at the level where they can best be solved and it is in constant evolution.

"In certain areas, EU member states retain much more influence and power than in a typical federal model. But in others, such as trade and competition policy, they have been gradually transferring more prerogatives to the European level."

The finance minister expressed his view that the eurozone crisis should not be seen as an indictment of the European welfare state, as sovereign debt crises can happen anywhere. Yet, the crisis serves as a reminder that "such comprehensive welfare systems must sit on sound financial foundations".

The origin of the crisis is insufficient financial regulation and supervision, decades of neglect of competitiveness in some member states, excessive reliance on tax income fuelled by speculative developments in the financial and property sectors, and lax fiscal policies leading to excessive sovereign borrowing in an environment of very low interest rates, he said.

Europe has to constantly adjust the various elements of the welfare state to reflect the gradual ageing of its societies. He also supports the G20's call to promote strong, balanced and sustainable growth. Together with the MF, Europe must be more vigilant about signs of deep

ening imbalances in the world economy or about unsustainable trends, for instance in public finances.

"We must also create a solid regulatory framework to govern all financial markets and all financial actors. We have made a lot of progress in this area within the G20 but there is still a lot to do. Lastly, we must avoid actions that would be detrimental to international trade as it is one of the biggest sources of growth for all of us," he said.

Despite the crisis, he sees Europe as an example for successful regional integration, which retains flexibility despite complex structures and preserved national competencies in many policy areas. Throughout the crisis, all countries discussed options, indicative of their solidarity.

"In many ways the European model which distributes sovereignty between the local, regional, state and European levels according to where problems and questions are best dealt with, is arguably the most modern in [the] world. The EU may look complex and sometimes slow, but it delivers functioning solutions for its 27 member states, which form the largest economic block in the world," he said.

The European Stability Mechanism, the regional bailout mechanism, is an expression of the strong solidarity that exists between its members, he said.

Though Germany is likely to absorb much of the bailout cost, from one estimate 4 trillion euros or more, Schaeuble said it is equally wrong to speak of costs.

"Germany's support for the adjustment programmes in Greece, Portugal and Ireland has meant that we have taken over a certain amount of risk that investors would have assumed in normal times. And again, all members of the eurozone have an existential interest in doing all they can to stabilise it."

The bailout requires the European Central Bank to purchase government bonds, which in a way will lead to money printing. Coupled with quantitative easing by major economies like the US, Japan and Britain, there are fears that years from now, the world would be threatened with hyperinflation.

Schaeuble noted that right now, what is important is to ensure price stability in the eurozone. Then, it is up to the central banks that inject money into the system to ensure a timely exit, or generous liquidity provision can turn into inflationary pressures.

He refused to comment on the right model for Asia, which consists of large and small economies and a regional grouping like Asean. Asia is a "successful continent ... from which we have much to learn", he said.

-- The Nation 2012-10-15

[cloudhopper]

Germany has had enough. Indeed, calls for regional secession are already rising within member states of Italy, Spain and Belgium. Atlas is beginning to shrug.

[jamescollister]

Germany has had enough. Indeed, calls for regional secession are already rising within member states of Italy, Spain and Belgium. Atlas is beginning to shrug.

The break of of EU nations into smaller States may just be the key to a Federal Europe.

Think what will happen if say Scotland and Wales get independence, then see that their prosperity lays in being a small State in a bigger EU Federation, then think of all those other small States in the make up of European nations. If they gain independence. They would in the end need to hand more and more power to the EU, or they would find themselves a small principality surrounded by a giant. Isolated from the new banking systems, European health care, unified military, centralized tax collection etc, etc.

Just the same as the ex Soviet States, they will want in and then one day you have the United States of Europe, no need for war to conquer the nations, they will gladly hand over power. Jim

[yoshiwara]

Maybe the role model for a United States of Europe is, wait for it, the United Kingdom.

Ho-ho.

[ThailandBert]

It simply needs to return to the original concept that was sold to the public. That of an open, free and common market. Everything other than this needs to be dropped. That includes the Euro.

[Sateev]

It simply needs to return to the original concept that was sold to the public. That of an open, free and common market. Everything other than this needs to be dropped. That includes the Euro.

Especially the Euro.

How can you have a whole bunch of countries who aren't allowed to set their own monetary policies? The cultures, productivity, transparency are all widely divergent...

[Naam]

the EURo is here to stay. but i admit, that perhaps in future a slightly different and more adaptive version might evolve. the procedure is called evolution

[Naam]

Germany has had enough. Indeed, calls for regional secession are already rising within member states of Italy, Spain and Belgium. Atlas is beginning to shrug.

these secession [wet] dreams are decades old and have nothing to do with the common curr€ncy.

[khunken]

It simply needs to return to the original concept that was sold to the public. That of an open, free and common market. Everything other than this needs to be dropped. That includes the Euro.

Especially the Euro.

How can you have a whole bunch of countries who aren't allowed to set their own monetary policies? The cultures, productivity, transparency are all widely divergent...

Disagree. There was nothing wrong with the project except for two things. Some countries should have been far more stringently tested before being allowed into the Euro. The second failure was not to enforce the rules on deficits. Germany & France were the first two to exceed the 'mandated' deficit limit which gave other countries the opportunity to do the same.

I agree with Schaeuble that banking & financial supervisory should be integrated - in fact it should be done on a world-wide basis. But of course the UK & the US wouldn't agree as it would limit the crazy risk-taking that was a major factor in the 2008 financial crisis, still far from resolved.

Where I disagree with Schaeuble is that too rigid austerity - without any possible growth & job creation - could well lead to anarchy in Greece or Spain. Actually Greece may be ripe for a coup.

[Naam]

I agree with Schaeuble that banking & financial supervisory should be integrated - in fact it should be done on a world-wide basis. But of course the UK & the US wouldn't agree as it would limit the crazy risk-taking that was a major factor in the 2008 financial crisis, still far from resolved.

[IMA_FARANG]

It simply needs to return to the original concept that was sold to the public. That of an open, free and common market. Everything other than this needs to be dropped. That includes the Euro.

------------------

Exactly.

I was working in Greece when it joined the EU.

Food prices ROSE about 20 percent with the adoption of the Euro.

Greek small farmers could not compete with the bigger German and French farmers due to economy of scale problems.

The bigger EU German and French producers were able to use their size to strangle the smaller Greek producers.

A Greek woman who lived near me in Crete owned several Orange groves.

Her traditional markets were in Cyprus, Malta, Albania, and Bulgaria. She shipped her fruit by rail.

You would mistakenly think that having uniform EU rates would have benefited her. Not so.

The Germans, French, and Spanish citrus producers and their volume discounts put her out of business.

She simply couldn't compete with their "economy of scale" lower cost citrus.

The landloard I rented my apartment from had a small business manufacturing solar water heater panels. At peak he employed 5 full time employees and as many as 5 part time employees when they had oders to ship.

Three to four years AFTER Greece joined the EU, my landlord had his business closed down, 5 full time employees out of work.

Why? Again he couldn't compete with the French and German economy of scale.

The EU and the EuroZone is IN FACT actually a method of transferring money from smaller scale southern European business (those in Greece, Portugal, Spain, etc.) to larger scale Northern European business ...France, Germany, and the (I'm-just-here-for-the-booze-and-broads-but-won't pay-my-honest-share-of-the-bill) United Kingdom.

From what I've seen the EU and the EuroZone have done MORE damage to it's smaller members than the good it's done.

For that reason....it's long past time to abandon it....and the sooner the better.

Edited October 15, 2012 by IMA_FARANG

[Rancid]

The Euro is a dead man walking. The fiancial and work ethic chasms between countries are too wide for a common currency to work. At any rate Europe is already run by a new monarchy, namely unelected bureaucrats, so it should be clear to all how well that has worked. I'm not European so really couldn't care less what they do, just seems they have created quite a mess and hard to see how it can possibly end well.

[Naam]

The Germans, French, and Spanish citrus producers and their volume discounts put her out of business.

yeah right! it must have been mainly the lone two dozen citrus trees which exist in Germany that put her out of business.

[Naam]

Three to four years AFTER Greece joined the EU, my landlord had his business closed down, 5 full time employees out of work. Why? Again he couldn't compete with the French and German economy of scale.

Greece joined the EU more than 31 years ago on jan1, 1981 and didn't do too bad till adopting the €UR by cheating and heaping a huge mountain of debt on the existing moderate mountain of debt. the favourite pastime of the Greek citizens was tax evasion.

[car720]

and Thailand wants to join ASEAN...........mmmm.........why is everything in the world controlled by bankers?

[yoshiwara]

and Thailand wants to join ASEAN...........mmmm.........why is everything in the world controlled by bankers?

I get bored with these cheap-shot blame the bankers moans.

[hansnl]

The Euro is a dead man walking. The fiancial and work ethic chasms between countries are too wide for a common currency to work. At any rate Europe is already run by a new monarchy, namely unelected bureaucrats, so it should be clear to all how well that has worked. I'm not European so really couldn't care less what they do, just seems they have created quite a mess and hard to see how it can possibly end well.

OK, you are not European, so you could not care less.

Really?

Think again!

If things go wrong in Europe, be assured things will also go wrong in the US, for example.

However, that said, the Euro was a political thing, a move to change the economic Union into a political union.

The result was a general downfall in buying power for most European people, prices were hiked up and wages remained more or less the same.

Things went awfully wrong when the US exported it's banking crisis to Europe.

And Europe is still smarting from this banking crisis.

However, there is a big gulf between the southern/eastern countries and the northern.

This gulf is huge and can probably never bridged.

The differences in Europe are enormous, language, religion, mentality, you name it, everything different.

Actually, the only thing all the countries have in common is that they are all in that part of the world which is called Europe.

The Belgium "president" wants to get a federal Europe because he is very afraid of the wish of Flanders to seperate itself from the French speaking part.

Illustrative is that Flanders transfers a huge anount of money every year to Wallon.

And that is more or less what is happening in Europe, the North is transferring to the South.

No thank you.

[cloudhopper]

Things went awfully wrong when the US exported it's banking crisis to Europe.

And Europe is still smarting from this banking crisis.

Right, the US is to blame for European economic problems.

[DominAsia]

At last Germany is beginning to question the validity of the EU - Nigel Farage and UKIP have a powerfull ally here

[Markaew]

and Thailand wants to join ASEAN...........mmmm.........why is everything in the world controlled by bankers?

I get bored with these cheap-shot blame the bankers moans.

Thailand wants to join ASEAN in name only. They want to preserve their visa scams and 100% import taxes. Thailand is being exposed for the national scammers they are.

[jamescollister]

and Thailand wants to join ASEAN...........mmmm.........why is everything in the world controlled by bankers?

I get bored with these cheap-shot blame the bankers moans.

Thailand wants to join ASEAN in name only. They want to preserve their visa scams and 100% import taxes. Thailand is being exposed for the national scammers they are.

What visa scams are you referring to, seems to me Thais and other bordering countries, cross borders and get visas fairly easy. As for import taxes, that's what ASEAN is about, free trade. Jim

[Naam]

Things went awfully wrong when the US exported it's banking crisis to Europe.

And Europe is still smarting from this banking crisis.

Right, the US is to blame for European economic problems.

there... there... Cloudhopper! it iss a vellnoun fakt zat for any yewropian problem ze Tchermans are zinz manny zentchuries responsibell

[Markaew]

and Thailand wants to join ASEAN...........mmmm.........why is everything in the world controlled by bankers?

I get bored with these cheap-shot blame the bankers moans.

Thailand wants to join ASEAN in name only. They want to preserve their visa scams and 100% import taxes. Thailand is being exposed for the national scammers they are.

What visa scams are you referring to, seems to me Thais and other bordering countries, cross borders and get visas fairly easy. As for import taxes, that's what ASEAN is about, free trade. Jim

That's my whole point. Thailand is NOT buying into the ASEAN agreement because they make too much money with visas and they haven't agreed with the free trade either.

[Naam]

That's my whole point. Thailand is NOT buying into the ASEAN agreement because they make too much money with visas and they haven't agreed with the free trade either.

billions of dollars!

[puck2]

It simply needs to return to the original concept that was sold to the public. That of an open, free and common market. Everything other than this needs to be dropped. That includes the Euro.

------------------

Exactly.

I was working in Greece when it joined the EU.

Food prices ROSE about 20 percent with the adoption of the Euro.

Greek small farmers could not compete with the bigger German and French farmers due to economy of scale problems.

The bigger EU German and French producers were able to use their size to strangle the smaller Greek producers.

A Greek woman who lived near me in Crete owned several Orange groves.

Her traditional markets were in Cyprus, Malta, Albania, and Bulgaria. She shipped her fruit by rail.

You would mistakenly think that having uniform EU rates would have benefited her. Not so.

The Germans, French, and Spanish citrus producers and their volume discounts put her out of business.

She simply couldn't compete with their "economy of scale" lower cost citrus.

The landloard I rented my apartment from had a small business manufacturing solar water heater panels. At peak he employed 5 full time employees and as many as 5 part time employees when they had oders to ship.

Three to four years AFTER Greece joined the EU, my landlord had his business closed down, 5 full time employees out of work.

Why? Again he couldn't compete with the French and German economy of scale.

The EU and the EuroZone is IN FACT actually a method of transferring money from smaller scale southern European business (those in Greece, Portugal, Spain, etc.) to larger scale Northern European business ...France, Germany, and the (I'm-just-here-for-the-booze-and-broads-but-won't pay-my-honest-share-of-the-bill) United Kingdom.

From what I've seen the EU and the EuroZone have done MORE damage to it's smaller members than the good it's done.

For that reason....it's long past time to abandon it....and the sooner the better.

Never read such a nonsense. German citrus producers

One fictitious story and you will understand why.

You and I, we are in the same club. I requested you for 500.000 GBP, because I would like to build a new club house and connecting streets. As members of the same club and being good friends you must trust me and give me the money. And because you are rich and I am a poor guy it's your duty to support me - club rules.

Instead of buying material for the construction of the club building and paying saleries for the workers I spent the money for my girlfriend and bribed some people of my political party and for my reelection. But it was not enough, I asked you for more cash money. What you didn't know and what should remain a secret a big unselfish US bank supported me, too. This money was secured by the club, so that the US-bank had no risq and had a good interest.

You heard of some rumors that I didnt build my house. You contacted me. All okay, was my answer and you paid again.

But after some time you got suspicious again and asked me why I didn't build the club house as promised. Your mistrust made me very angry, and I told you: look out on the street the party people want more cash, they are used to. If I would refuse they destroy our club and would hurt you and me. So please, don't talk about that construction work, give me more money. Many years before, You didn't mind me belonging to this club. You didn't check my finances.

Now you and your family bristled at me and you told me that I betrayed you by sucking money out of you only for my own purpose and not for the future of my club.

Now replace

• You, your = A member of EU (European Union)
  
• I , me = GREECE and Greek government
  
• club = EU
  
• club/house = infrastructure, support of industry and development - in general investment for the future
  
• gf., reelection = corruption (Thai like), cheating, personal advantage - in general self consuming
  

To your thread.

1. Because the Greek government has been spending money mainly for personal interests, corruption and reelection (consumption) and not investing in the future "your" Greek farmers had been victim of the corrupt Greek policy and not of the economy of France or Germany.

2. In my fiction YOU = the EU made the uncredible and inexcusable mistake not to check MY (Greek) issues. Why was the EU bureaucracy (and politicians, too) so incompetent not to know or understand what happened in a normal Greek's life? A German friend with a restaurant on the beautyful Corfu island told me already before the crash about the problems with the Greeks, now evident

The absurd decree of the EU Commission #2257/94 concerning the curve of imported bananas was pretty detailed, but the norms for a new member missed this "quality".

Believing the Greek's government without control was and is a great mistake.

Edited October 16, 2012 by puck2

[chainarong]

The answer is to kick out the ones who should not be there, you now reap the benefit of allowing countries in, that didn't make the financial criteria , what ye reap so ye shall sow, you brought it on your greedy selves.

[Naam]

The answer is to kick out the ones who should not be there, you now reap the benefit of allowing countries in, that didn't make the financial criteria , what ye reap so ye shall sow, you brought it on your greedy selves.

the EU charta does not provide any possibility to kick a member out.

[chainarong]

The answer is to kick out the ones who should not be there, you now reap the benefit of allowing countries in, that didn't make the financial criteria , what ye reap so ye shall sow, you brought it on your greedy selves.

the EU charta does not provide any possibility to kick a member out.

That's correct ,there's countries in that lot that didn't make the financial criteria, so the others altered the rules, they all voted them in

, now they winge, they have only themselves to blame nobody else.

[Naam]

The answer is to kick out the ones who should not be there, you now reap the benefit of allowing countries in, that didn't make the financial criteria , what ye reap so ye shall sow, you brought it on your greedy selves.

the EU charta does not provide any possibility to kick a member out.

That's correct ,there's countries in that lot that didn't make the financial criteria, so the others altered the rules, they all voted them in

, now they winge, they have only themselves to blame nobody else.

except for Nigel Farage the professional anti-EU whinger i don't know any

[Morakot]

What was the question? Solving the financial crisis in Europe? Or did he mean the crisis of neoliberal capitalism?

Edited October 17, 2012 by Morakot