Tue, Jan 19, 2010 page10

• Eurozone head seeks oversight of national economies

  • AFP
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  The head of the euro group has called for tougher surveillance of national economies, seeking permission for the EU’s executive arm to warn those not up to scratch, in a letter seen on Sunday by reporters.

  Eurogroup chairman Jean-Claude Juncker, in a letter to finance ministers on the eve of a meeting in Brussels expected to return him as chairman, also said he wanted to boost the 16-­nation area’s profile in international institutions.

  “The Eurogroup should pursue broader economic surveillance, both to identify individual priority issues for each of our member states and to establish a coherent framework for action to enhance the performance of the entire eurozone economy,” wrote Juncker, who is also prime minister of Luxembourg. “The European Commission should not hesitate to ... address a warning to the member state” not respecting criteria and commitments.

  “Following the issuance of a warning by the European Commission, the Eurogroup should have a frank discussion with the member state concerned with a view to ensuring that effective action is taken,” he wrote.

  Juncker, Europe’s longest-­serving leader, was widely expected to win a new 30-month mandate yesterday to lead the single currency bloc.

  Several countries, however, among them France, have said they want more from Juncker than in the past, notably to promote better coordination of economic policy among the members.

  French President Nicolas Sarkozy blamed Juncker for not acting quickly enough when the global financial crisis first hit home in 2008, as well as his reluctance to change Luxembourg’s banking secrecy laws.

  Already in charge of the ­grouping in its semi-informal guise since 2005 — 10 years after Juncker took power in Luxembourg — the Eurogroup has acquired formal recognition under the Lisbon Treaty that entered force last month.

  It faces some of the most difficult economic and political challenges since the euro came to be a decade ago, however, amid a Greek debt crisis and fears over wider foreign exchange fluctuations driven by Washington and Beijing.

  “The crisis has served to highlight some of the weak points that were masked by the relatively benign economic environment of the last few years, issues that need to be addressed by each of us if we are to improve our economies’ resilience and increase potential growth,” Juncker wrote. “We need a candid discussion, both about the overall goals of our economic policy and about the individual needs and priorities of our member states.”

  Apart from promoting peer pressure, Juncker said it was time to boost the profile and influence of the single currency group.

  “I think it is essential at this juncture to ensure that the euro area’s interests are fully reflected in international discussions,” he wrote to the ministers. “I firmly believe that the euro area dimension should permeate all of the work of the international financial institutions and conferences — the Eurogroup will need to work hard to make sure that it does so.”

  The economic atmosphere, of course, is anything but good, with most of the euro countries — like their broader EU partners — carrying large public deficits well beyond proscribed limits.

  France and other European nations, including Spain, also want to promote the idea of stronger economic governance, without anyone as yet being willing to talk specifically about “sanctions” for fiscally wayward members.
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