How the EU elite got it wrong on the euro: broken promises and reckless predictions from before the crisis
26 May 2010
The sovereign debt crisis that started with Greece now casts a long shadow over the entire eurozone, and indeed Europe as a whole. The previously unthinkable has become reality – German Chancellor Angela Merkel has warned that the single currency is in jeopardy and called for treaty changes to give the EU significant new powers over eurozone economies.
It’s in everyone’s interest for the eurozone to return to stability. However, moving forward, we must also ask: how did we end up in this mess? Politicians, after all, reassured us this was never going to happen. Open Europe has published some of the promises that the EU elite made over the last 15 years, highlighting that the politicians who sold their citizens the euro failed to either grasp or tell the whole truth about the single currency.
While it is a reminder that the experts and our elected representatives do get it wrong, more importantly, it is a call for greater honesty about the future of European cooperation and a reminder of the urgent need to find a new model that is both politically and economically sustainable; one that is more in tune with the interests and preferences of European citizens.
Open Europe analyst Vincenzo Scarpetta said:
“Ultimately, the eurozone crisis is not simply about economic failure but also a breakdown in trust between the political class and European citizens. The EU elite simply got it wrong on the euro – displaying a combination of naïve idealism, incompetence and dishonesty.”
“The eurozone needs a long-term fix – no one wants to see more economic turmoil – but EU leaders won’t achieve this until they face up to the failures and mistakes of the last twenty years. The elite-driven EU project is failing, and we now urgently need to find an economically sustainable and more democratic model for European cooperation that is more in tune with the interests and preferences of European citizens.”
To read ‘They said it: how the EU elite got it wrong on the euro’, click here:
http://www.openeurope.org.uk/research/eurotheysaidit.pdf
A dozen broken promises and reckless predictions:
“The Community shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project”.
- Article 104b, Maastricht Treaty, 1992.
“We have a Treaty under which there is no possibility of paying to bailout states in difficulty”.
- German Chancellor, Angela Merkel, 1 March 2010[1].
“[Greek Prime Minister] Papandreou has said that he didn’t want one cent. The German government will not give one cent, anyway“.
- German Economy Minister, Rainer Brüderle, 5 March 2010[2].
“The single currency, far from being an agent of continental style corporatism, is probably the greatest export vehicle of Anglo-Saxon economics. The euro has done more to enforce budgetary discipline, to promote privatisation and force through labour and product market liberalisation in the rest of Europe than any number of exhortations from the IMF, the OECD, or the editors of The Economist”.
- Lib Dem leader, Nick Clegg, 2002[3].
“The reality of the euro has exposed the absurdity of many anti-European scares while increasing the public thirst for information. Public opinion is already changing […] as people can see the success of the new currency on the mainland and the alarming fall in inward investment into Britain as international companies show an increasing reluctance to locate here”.
- Kenneth Clarke MP, 2002[4].
“The euro has been a rock of stability, as illustrated by the contrasting fortunes of Iceland and Ireland. Joining the single currency would be a major step”.
- Former Labour MEP Richard Corbett, 2009[5].
“We must enter the euro with a clean sheet on all the criteria”.
- Then Greek Finance Minister, Yannis Papantoniou, 1999[6].
“The thrust of the spirit and of the letter of the Treaty is that everything is done to construct the euro area as an optimum currency area. First by ensuring that it incorporates economies that have already proved being convergent in the fiscal field as well as in the monetary and financial fields”.
- Then Governor of the Bank of France, Jean-Claude Trichet, 1997[7].
“It is sometimes said that while the single monetary policy may be ‘right’ for the euro area as a whole, it is ‘wrong’ for many individual countries within the area. I disagree with this view. First, it overlooks the fact that within a single currency area adjustment can occur via prices and wages”.
- Then President of the European Central Bank, Wim Duisenberg, 1999[8].
“Solidarity is possible, [and] will exist. A bailout is not possible and will not exist”.
- Then EU Commissioner for Economic and Monetary Affairs, Joaquín Almunia, 29 January 2010[9].
“I will defend European Central Bank’s independence under any circumstance and with all my strength”.
- ECB President, Jean-Claude Trichet, 2007[10].
“The euro is a protection shield against the crisis”.
- European Commission President, José Manuel Barroso, 5 February 2010[11].
Notes for editors
1) For more information, please contact Mats Persson on 0044 207 197 2333 or 0044 779 94 606 91.
2) Open Europe is an independent think-tank calling for reform of the European Union. Its supporters include: Sir Stuart Rose, Executive Chairman, Marks and Spencer plc; Sir Crispin Davis, Former Chief Executive, Reed Elsevier Group plc; Sir David Lees, Chairman, Tate and Lyle plc; Sir Henry Keswick, Chairman, Jardine Matheson Holdings Ltd; Lord Sainsbury of Preston Candover KG, Life President, J Sainsbury plc; Sir John Egan, Chairman, Severn Trent plc and Lord Kalms of Edgware, President, DSG International plc; Hugh Sloane, Founder, Sloane Robinson.
For a full list, please click here:
http://www.openeurope.org.uk/about-us/supporters.aspx
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[1] Deutsche Welle, ‘Angela Merkel rules out German bailout for Greece’, 1 March 2010, http://www.dw-world.de/dw/article/0,,5299788,00.html
[2] AFP, ‘La Grèce vient de chercher du soutien à Berlin, pas de l’argent’, 5 March 2010 ; http://www.rtbf.be/info/economie/ue/la-grece-vient-chercher-du-soutien-a-berlin-pas-de-largent-194136
[3] http://www.prospectmagazine.co.uk/2002/01/nick-clegg-joining-euro-risk-gideon-rachman/
[4] Writing in the Times, 15 May 2002
[5] Bradford Telegraph and Argus, ‘Corbett wants debate on euro’, 16 January 2009
[6] World News, ‘Greek euro-zone ambitions tempered by inflation fears’, 23 August 1999
[7] Speech by the Governor of the Bank of France, M. Jean-Claude Trichet, on the occasion of the fiftieth anniversary of the Land central bank of Rheinland-Palatinate and the Saarland in Mainz on 2/6/97; http://www.bis.org/list/cbspeeches/from_01041997/index.htm
[8] Speech delivered by Dr. Willem F. Duisenberg, President of the European Central Bank, at ‘Nieuwspoort’ in The Hague, Netherlands, on 5 November 1999; http://www.bis.org/review/r991109b.pdf
[9] Reuters, ‘Greece: EU says no bailout’, 29 January 2010, http://uk.reuters.com/article/idUKTRE60R3BX20100129
[10] Corriere della Sera, ‘Trichet difenderò l’indipendenza della BCE’, 11 July 2007; http://www.corriere.it/Primo_Piano/Economia/2007/07_Luglio/11/Trichet_bce.shtml
[11] Le Matin, 5 February 2009