Closing of ranks on reform of the Eurozone
Leading German and French economists have presented their proposals for the reform of the Eurozone in Berlin and Paris. One notable aspect here was that both proponents of market discipline and austerity and economists who favour more solidarity and risk-sharing formed part of the work group - i.e. representatives of the two camps that often seemed irreconcilable in the euro crisis. Are their ideas any good?
The time is ripe
The Süddeutsche Zeitung welcomes the reform proposals, and their radicalness:
“The economists propose six major, interconnected reforms, the most spectacular of which is that they want to scrap the three-percent-deficit criterion and replace it with a growth-related spending rule. The plan to change the almost sacred rules set out in the Maastricht treaty is definitely radical. And the other points are also quite drastic. ... It won't be easy, but the reforms are overdue. The euro is proving its worth as a strong currency, and everywhere in Europe the economy is growing. ... Once a new German government is in place - hopefully soon - the euro reform can begin.”
An end to the ideological rifts
Business paper Les Echos also praises the reform proposals worked out by the Franco-German team:
“Their goal is to reconcile the approaches of Paris and Berlin, which have been at loggerheads for years. On the one hand the proposals incorporate the French demand for solidarity and risk-sharing mechanisms, and on the other hand the German demand for budget discipline and a place for punishment by the markets. What's more: the authors show that the former (solidarity) isn't possible without the latter (responsibility). ... This initiative will allow us to overcome these ideological rifts by means of concrete measures that tackle all the Eurozone's weaknesses: financial fragmentation, inefficient budget rules and the inability to manage budget crises.”
All that is needed now is the political will
Now the ball is in the court of politicians in Berlin and Paris, the Neue Zürcher Zeitung stresses:
“If the monetary union is to be made weatherproof for the next crisis, France and Germany must move closer together. And on this point the reform paper provides valuable suggestions. However, all the ideas won't change the fact that no matter how clever it may be, any rule is only worth as much as the political will to see it through to the end. And in this respect the politicians of the monetary union do not have a good track record at all. For that reason until the reform of the Eurozone has been completed - if it ever is - it would be best if the rules now in effect were adhered to at least partially.”