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le gouvernement économique for the EU: much ado about what?

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this is my presentation for Prof.Chang course at the College of Europe. …

this is my presentation for Prof.Chang course at the College of Europe.
the views expressed are the full responsibility
of the author alone and do not engage the College of Europe.
les éléments contenus dans cette présentation n’engagent que son auteur et ne peuvent en aucune façon etre attribués au College d’Europe

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  • France’s then-president, François Mitterrand, wanted something else. He was talking about a “European economic government” as early as 1990, meaning something that looked a lot like French economic government on a European scale, in which the “technocrats” of a central Euro-bank would be “counterbalanced” by elected politicians, who could tell them when to put growth and jobs ahead of price stability or fussing about deficits (Charlemagne anotherarticle)
  • Economic governance has ostensibly and rhetorically been presented as a counterbalance to the monetary policy-making power of the ECB (Howarth: 1061).I believe that the idea of gouvernementéconomique is just a discourse which shows the French activist approach towards the EMU and the desire for reform a la francaiseю
  • Pierre Bérégovoy, Minister of Finance from 1988 to 1992: ‘Everywhere in the world, central banks in charge of monetary policy are in dialogue with the governments in charge of the rest of economic policy. Ignore the parallelism between economic and monetary matters . . . and this could lead to failure’ (Howarth: 1067 citing the French draft treaty 1991)
  • Moreover, even earlier, the Delors report on Economic and monetary union highlighted the ideas expressed by Beregovoy and Mitterand during the negotiation period.Achieving fiscal union through co-ordination. (1) is about coordination and why needed – for some sort of a fiscal union; (2) and (3) are about fiscal disciple argument
  • Lamfalussyregarded the developmentof a Community-wide fiscal policy as the primary objective and the avoidance of excessive national deficits as a complementary one. At the limit, coordination was a must and fiscal discipline, the natural and welcomed effect of an appropriate fiscal co-ordination framework. (P.-F.: 826)
  • But the reality of the deal appeared to be very German when it came not only to the monetary pillar but also to the economic pillar of the Union. Subsequent rounds of complementing the Treaty’s articles on the EMU made the whole economic pillar even more German, and, thus, fiscal discipline orientated.
  • “On the whole, however, stronger automatic mechanisms are needed in the application of the stability pact” (Jürgen Stark, a member of the executive board of the ECB andthe ECB'schiefeconomist). So, everything repeats: a bit more fiscal coordination and fiscal discipline is a must.Indeed, the German and French Finance Ministries have developed a draft plan that would significantly strengthen financial policy cooperation in the EU. The plan, which has been seen by SPIEGEL, calls for increased monitoring of individual member states' competitiveness so that action can be taken early on should problems emerge.
  • See Ferry, p.
  • Transcript

    • 1. Legouvernement économique
      for the EU:
      much ado about what?
      Anna Dekalchuk,
      March, the 26th
    • 2. OUTLINE
      le gouvernement économique: the French vision
      negotiating the EMU: which place for a g.é.?
      the Maastricht architecture and its defects
      current debate and current meaning of a g.é.
    • 3. le gouvernement économique: the French vision
      “The French have traditionally used the words "European economic government" to mean something like: politicians being allowed to bully the European Central Bank about exсhange rate policies, and to flout deficit rules if their countries are large, broadly hexagonal in shape, and are known for fine wine and cheeses”
      (The Economist, Charlemagne’s notebook, ‘10)
    • 4. le gouvernement économique: the French vision
      3
      2
      4
      1
      This concept has been manipulated to cover:
      economic policy co-ordination with other member state governments and with the ECB to achieve an ‘appropriate’ policy mix;
      a more energetic EU-level interventionism designed to stimulate economic growth and create jobs;
      the reinforcement of EMU’s credibility and legitimacy;
      an explicit challenge to the ECB’s goals and goal-setting and operational independence.
      (Howarth, ‘07: 1062)
    • 5. negotiating the EMU: which place for a g.é.?
      an economic government could contribute trough:
      1.
      speaking with one voice externally
      2.
      coordinating economic policies
      3.
      conducting exchange rate policy
      (Pisani-Ferry, ‘06: 826)
    • 6. negotiating the EMU: which place for a g.é.?
      “In the economic fielda wide range of decisions would remain the preserve of national and regional authorities. However, given their potential impact on the overall domestic and external economic situation of the Community and their implications for the conduct of a common monetary policy, such decisions would have to be placed within an agreed macroeconomic framework and be subject to binding procedures and rules.
      This would permit (1)the determination of an overall policy stance for the Community as a whole, (2)avoid unsustainable differences between individual member countries in public sector borrowing requirements and (3)place binding constraints on the size and the financing of budget deficits”
      (Report on economic and monetary union in the European Community, ‘89: 18)
    • 7. negotiating the EMU: which place for a g.é.?
      Macro-coordination of fiscal policies in an EMU in Europe,
      1989
      “The combinationof a small Community budget with large, independently determined national budgets leads to the conclusion that, in the absence of fiscal co-ordination, the global fiscal policy of the EMU would be the accidental outcome of decisions taken by Member States. There would simply be no Community-wide macroeconomic fiscal policy”
    • 8. negotiating the EMU: which place for a g.é.?
      Macro-coordination of fiscal policies in an EMU in Europe,
      1989
      Therefore “fiscal policy co-ordination would appear to be a vital element of a European EMU and of the process towards it. Appropriate arrangements should therefore be put in place which would allow the gradual emergence, and the full operation once the EMU is completed, of a Community-wide fiscal policy. Such arrangements should also aim at avoiding disruptive differences between the public sector borrowing requirements of individualmember countries”
    • 9. negotiating the EMU: which place for a g.é.?
      Art.111: “the Council may formulate general orientations for exchange-rate policy… these general orientations shall be without prejudice to the primary objective of the ESCB to maintain price stability”
      and
      Eurogroup, ‘97
      Luxembourg European Council, ‘97
      (Begg, Hodson, Maher, ‘03: 71)
    • 10. the Maastricht architecture and its inborn defects
      Spain is disciplined
      (Krugman, ‘10)
    • 11. the Maastricht architecture and its inborn defects
      check out the inflation
      (Krugman, ‘10)
    • 12. the Maastricht architecture and its inborn defects
      that doesn’t mean that Germans are evil, though
      (Krugman, ‘10)
    • 13. the Maastricht architecture and its inborn defects
      neither are Dutch
      (IMF, 2009 World Economic Outlook)
    • 14. current debate and current meaning of a g.é.
      EUROPEAN COUNCIL, February, the 11th
      A.Merkel: “The EU needs to better coordinate … We [the European Council] are presenting ourselves as an economic government of 27 countries”
      ? Il existe désormais un consensus historique entre l’Allemagne et la France sur la voie à suivre ?
      (F.Fillon, ‘10: 9)
    • 15. current debate and current meaning of a g.é.
      GERMANY
      and a g.é.
      EU 2020 withlargerteeth?
      European Monetary Fund
      with the Treaty change?
      stronger fiscal discipline!
    • 16. current debate and current meaning of a g.é.
      Werner plan, 1970
      “The margins within which the main budget aggregates must be held both for the annual budget and the multi-year projections will be decided at the Community level, taking account of the economic situation and the particular structural features of each country. A fundamental element will be the determination of variations in the volume of budgets, the size of the balance and the methods of financing deficits or utilizing any surpluses. In order to be able to influence the short term economic trend rapidly and effectively it will be useful to have at the national level budgetary and fiscal instruments that can be handled in accordance with Community directives”
      (Werner plan, ‘70: 11)
    • 17. to discuss
      why do Germans still speak about fiscal discipline?
      is fiscal union possible to appear during this crisis?

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