A somewhat suspect German success

  • The European Commission began the “European Semester” with its economic analysis and examination of imbalances.
  • Friday, it will give its opinions on national budgets.

They dared to do it. Wednesday, faced with a pressroom bursting with reporters who were there to hear about the “European Semester,” Commission president Barroso and financial affairs Commissioner Olli Rehn vied with each other to use phrases aimed at reducing their announcement’s political shock in Germany. The fact remains: for the first time since the institution of economic governance supervision by its Brussels headquarters in 2010, the Commission has opened an in-depth inquiry into Germany.

The objective is to determine if the “heightened and persistent” surpluses in its current accounts (especially its trade balance: see yesterday’s Le Soir) constitute a source of excessive economic imbalance in Europe. “It’s not about questioning Germany’s competitiveness – we’d like to see other Germanys in Europe,” stated José Manuel Barroso, while his colleague Olli Rehn warned against “excessive politicization of this issue,” repeating: “we are not criticizing Germany’s success!”

While President Barroso waited until the end of the long statements to listen to the other side of the question, he did say, “of course it’s political.” Could Germany do more to improve Europe’s economic performance?” Asking that question raised once again the hypothesis that Germany is not playing entirely fair…

In the document on the “alert mechanism,” the Commission’s offices have included some clarification on these well-known surpluses. They are not a risk in themselves but “the savings on the part of countries with surpluses have financed the deficits of countries on the periphery,” the document states. In addition, “in the European Union, account surpluses in one country tend to generate deficits in partner countries.”

“We have been saying that since the Greek crisis,” said Pervenche Berès (French PS), when interviewed by phone. Berès is president of the European Parliament’s Commission for social affairs. “This time it’s the European Commission that is saying it, and that is very significant. The Commission has to realize that it can’t limit itself to beating up countries with deficits: that does not answer the question of interdependencies and the resulting divergences between countries.”

While Germany finds itself being examined for the first time by European headquarters, it’s not in bad company. The list of 13 countries being investigated includes the United Kingdom, the Netherlands, Finland, France and Belgium. Since yesterday, in addition to Germany, Luxembourg and Croatia have also been caught in the Commission’s net.

The launch of the “European Semester” also includes a sense of the Commission’s economic focus. It emphasizes the signs of a “slow recovery” but also reveals a very troubling symptom: the deterioration of European exports. That is quite a paradox, obviously, at a time when Germany is being called on the carpet for its success in the matter. José Manuel Barroso, also flanked by employment and social affairs Commissioner Làszló Andor, pointed to the seriousness of the unemployment problem, particularly youth unemployment, “at unacceptable levels.”

The Commission listed five priorities: “to ensure a budgetary approach that is conducive to growth, to reestablish lending activity in the economy, to promote growth and competitiveness, to fight against unemployment and take measures against social decline caused by the crisis, and (finally) to modernize public administration.” All of these priorities have suffered from austerity programs. These programs, contrary to some opinions, are not yet ready to be discontinued.



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