Tag Archives: EU

Macron’s Eurozone Reform

By Shad Joynal-Abedin, Participant in the G-20 at BEF 2016.

As the European Union experiences a robust economic recovery, with the unemployment rate at a 10-year low and job creation at a 10-year high, the election of Emmanuel Macron as President of the second largest economy of the Eurozone creates a de facto window of opportunities for a comprehensive institutional reform.

Mr. Macron delivered a speech at Sorbonne University on September 26, 2017 laying out his vision for “a sovereign, united and democratic Europe”. In his vision the Eurozone encapsulates the heart of Europe’s global economic power.

Why does the Eurozone need to be reformed?

The Eurozone is the monetary Union under which 19 out of the 28 member states of the EU agreed to adopt a common currency. The euro, nowadays used by 338 million consumers daily, is part of the European identity for many EU citizens. However, the 2009 sovereign debt crisis highlighted that the Eurozone was incomplete. The call for a strong fiscal Union to support the existing monetary Union could not be ignored any longer. Especially member states with the poorest fiscal discipline had to deal with an asymmetric economic shock. Even if steps have been taken to strengthen the governance of the Eurozone in terms of prudential regulation and banking union, the need to build stronger institutions to foster growth and to fund common investments has not disappeared.

What is currently being discussed?

To reshape a Eurozone seen as the backbone of a strong Europe, the French President advanced several proposals:

1. A common Eurozone budget.

Mr. Macron is pushing for more economic integration with the creation of a common Eurozone budget. It would have one main objective: financing investments and emergency assistance in case of economic shocks as well as responding to financial crisis. Access to this budget would be conditioned with respect to common fiscal and social standards.

2. A Eurozone Finance Minister.

The French President also called for more political integration through the creation of a Eurozone finance minister. This minister would permanently chair the Eurogroup and would oversee the common budget. This position would merge the existing jobs of president of the Eurogroup with the different EU commissioners in charge of the economy.

3. A Eurozone Parliament.

Additionally, Macron is in favour of creating a Eurozone Parliament (or a Eurozone subcommittee inside the European Parliament) to politically control the finance minister. He would also serve as vice-president in the European commission.

What are the challenges ahead?

In March 2017 the European Commission presented its White Paper on the future of Europe. It gives an overview of different scenarios to describe the possible state of the Union by 2025. Considering his manifesto, President Macron’s Eurozone proposals would undoubtedly enter into the most ambitious scenario drafted by the Commission. In this option, called “doing much more together”, member states are expected to “share more power, resources and decision-making across the board”.

However, Macron’s political willingness may be tested both at the national and European level. In France, he may enter a period of uncertainty as his government implements its reform agenda. The political cost of some of the upcoming structural changes, such as the housing or the fiscal reforms, is still unpredictable. At the same time the labour market overhaul is expected to be fruitful only on the long run. In a country that remains divided on the EU, following an election in which 33,90% of the voters supported Marine Le Pen and 25% did not cast any ballot, the question is whether the president will enjoy enough popular support on his European agenda.

In the EU, President Macron will have to convince his European partners. While France’s relationship has deteriorated with Poland on the issue of posted workers, countries such as Belgium, Luxembourg, Spain or Portugal have already welcomed the latest announcements. Moreover, by choosing as senior diplomatic advisor the former French Ambassador to Germany who also served as Ambassador to the EU, the French President expressed his eagerness to reengage with Germany on European affairs. The current political crisis in Germany is therefore closely followed by Paris as any unbalanced outcome could undermine the consequential German support that Macron is seeking for a successful Eurozone reform.

Please note that the views expressed are those of the author and do not necessarily represent or reflect the views of Munich European Forum e.V.

“Where is Poland going” or “195 days with the new Government”

By Marcin Kovalevskij, Participant in the G-20 at BEF 2016.

Prior to the PiS party (Law and Justice, a right-wing party) achieving a majority in the parliamentary elections in late 2015, Poland has enjoyed eight years of relatively calm state governance by the PO party (Civil Platform, a central-right-wing party). It seems though that the Poles have achieved what they wanted – change. After the new Republic President Andrzej Duda signed the first set of new rules however, many Poles rushed out into the streets complaining about the violation of democracy. The changes adopted in the first months of its mandate by the incumbent Beata Szydło Government are significant. It ought to be said that without a majority in the parliament and the new President coming from the ruling party, the Government would not have been able to succeed in reforming the country, nor adopt controversial Constitutional Court and the public media acts[i] which today are one of the top discussion topics in Brussels. In order to see what is really happening in Poland, a quick overview of the most significant new law is required.

Starting with the most successful PiS coup de maître is the 500+ program[ii] which aims to counteract the diminishing birth rates and stop emigration. The plan is to encourage second and additional children regardless of family income through monthly 500 PLN handouts (EUR 114) until the children reach eighteen years of age. This social programme is a clever step forward considering the European phenomenon of negative birth rates and the associated consequences they may bring in the long-term. The initial secret of the success of this policy is by financing this incentive not through the national budget, but rather through a reform of the fiscal policy, including taxing financial institutions, banks and hypermarkets.

The second great legislative reform, the amendment to the Law on Broadcasting Act, is the one driving Poles to rush out into the streets in protest. The reformed act removes the mandate of the National Council of Radio and Television members to select management and supervisory boards of public radio and television, giving this power instead to the Minister of State Treasury. The outcome is clear – public media will be vulnerable to government pressure. This is therefore a first step in eliminating the main principles of a fair media: objectiveness, accurateness and reliability. Polish-Flag

The next Governmental change is the new reform to the Constitutional Tribunal Act of December 2015. This law has changed the quorum for the Polish Constitutional Court from 9 to 13 judges and amended process of hearing cases chronologically as they enter the court, whereby previously the more important cases were heard first. This change has caused domestic protests and criticism on the European level, as it threatens the rule of law and the human rights of Polish citizens. “Paralyzing the work of the Constitutional Tribunal poses a threat to the rule of law, democracy and protection of human rights,” according to the Venice Commission. In April 2016 however, PiS followed the recommendations from the Venice Commission and submitted a new Constitutional Court draft amendment to the Parliament, with changes to the previous controversial law, including increasing the quorum for the tribunal to 11 out of 15 judges.

It is worth noting that this is simply an overview of the few most significant changes adopted by the Polish Government. Other provocative new regulations were adopted, such as an amendment to the law on the civil service which changes the designation of higher positions in the civil service. Instead of the previous application and competition system, senior civil servants will be hired by appointment. As a result, this may increase nepotism and reduce the competence of the administrative branch. In addition, “coat hanger”[iii] protests took place in Warsaw in order to stop the possible adoption of strict anti-abortion laws which, if implemented, would make abortion almost impossible.

The success of right-wing parties in Europe, such as in Poland, can be explained very simply – there has been a saturation of liberal political systems which have adopted pro-immigration policies in response to the growing exodus from the Middle East. This helped the right-wing PiS to win elections and to pursue its political strategy. Nevertheless, the likelihood of PiS retaining its mandate for the next legislative period is modest, as public opposition to its policy is very significant given that the Government has been in power for little more than 195 days[iv].

Please note that the views expressed are those of the author and do not necessarily represent or reflect the views of Munich European Forum e.V.


 

[i] Constitutional Court and Public Media new laws http://www.bbc.com/news/world-europe-35786650

[ii] Poland +500 program http://inside-poland.com/t/polands-finance-minister-to-press-ahead-with-500-family-benefit-despite-report-that-government-cant-afford-it/

[iii] “Coat hanger” protests in Warsaw http://www.theguardian.com/world/2016/apr/03/warsaw-protest-against-proposed-abortion-ban

[iv] The current Polish Parliament has governed already for 195 days, with the first Parliamentary meeting taking place on 12 November 2015.