One may not agree with former Greek finance Minister Yanis Varoufakis but occasionally the man is right. Very right and very to the point, indeed. On the European Commission’s proposal for “Less austerity” Varoufakis commented with an article “Irrelevant proposal by an irrelevant Commission”.
Some excerpts here:
So, the European Commission, at last, concluded that the eurozone’s fiscal stance is too austerian. “Better late than never”, some will say. Alas, this is too optimistic a take. The reason? The Commission is irrelevant and it knows it. Decisions of fiscal policy are now taken in the eurogroup where Commissioner Moscovici has next to no gravitas. Moreover, the Commission seems to know this, putting forward a proposal that it knows will be ignored.
Brussels, correctly, suggests that the eurozone should be seen as a single macroeconomy:
“To assess the current situation, it is important to consider the euro area as a single entity, as if there were a finance minister for the euro area as a whole and to look at its fiscal policy in aggregate terms. This is the approach taken in this section.”
This is admirable. Except that Berlin will never, ever allow Commissioner Moscovici, or indeed any Commissioner, the opportunity to think of himself as the eurozone’s minister of finance. If such a role is to be allowed for, it would be afforded to an enhanced eurogroup President. Put simply:
The European Commission is now irrelevant from the perspective of managing the eurozone economy. It has been well and truly replaced by the informal, extra-Treaty eurogroup.
But let’s set this aside for a moment and humour the Commission by taking it seriously. What is it proposing in its recent report? It is proposing a modest fiscal expansion of some 0.5% of GDP across the eurozone. Will Wolfgang Schäuble agree? Of course not. And it is not just that he will not agree. He is, more importantly, forbidden by the German… Constitution from agreeing, as the Commission’s proposal violates the debt brake that the German government has, unbelievably, enshrined in the nation’s Constitution. This proves the earlier point that the Commission is making a proposal it knows it will be rejected in advance. Such is the European Commission’s present irrelevance.
Read the whole article on Varoufakis’ blog here.
EU Commission proposal for Less Austerity here
PS OK, I leave an option open here for the case Merkel silenced Schaeuble and he had to give his consent.