Source: Handlesblatt Global) — Members of the euro zone – including Germany and France – have consistently flouted the currency union’s economic rules, but E.U. institutions are too afraid to confront them.
German Finance Minister Wolfgang Schaeuble speaking in Brussels on Tuesday, said that was the only way the currency union could regain credibility – by taking its own rules seriously.
The currency union has come up with a raft of new measures meant to tackle ballooning debt and macroeconomic imbalances. The European Commission produces economic policy recommendations tailored to each of the 19 nations using the euro each year. But, in the end, it amounts to a pile of paper yielding few real results.
The E.U. authorities made 102 country-specific recommendations in 2014, only seven of which were fully implemented. Euro-zone members completely ignored 40 of them, according to a draft paper for the European Parliament’s economic committee.
The government in Paris has failed to stick to the euro zone’s stability pact for several years without the rest of the currency bloc raising much of a fuss about it.
Only in March, the Commission gave France more time to consolidate its budget – for the third time. The only condition was that Paris needed to lower its structural deficit by 0.5 percent in 2015 and by 0.8 percent in 2016.
Paris, however, wasn’t so inclined, which the Commission on July 1 duly noted: “The consolidation efforts have fallen short.” But there were no sanctions for France’s behaviour; instead the Commission said its deficit procedure against Paris had been suspended.
European authorities have given E.U. governments plenty of suggestions about how they could improve the bloc’s international competitiveness, but they have been largely ignored in Europe’s capitals.
“Only eight percent of the recommendations have been completely or substantially implemented,” according to an analysis by the European Parliament. These recommendations have also fallen on deaf ears in Germany.
For example, Berlin has steadfastly refused to liberalize many occupations to bolster competitiveness.
The Commission meekly accepts this though it could increase pressure on Germany by ratcheting up its efforts against economic imbalances and even imposing financial sanctions on Berlin. The European Central Bank has demanded that repeatedly, saying in March that the E.U. authorities must “fully and effectively use” such instruments in order “to minimize potential risks to the euro.”