Thursday, February 10, 2011

Sovereignty in the 21st century and the German-French competitiveness pact!

A) Does this pact interfere with the Sovereignty of some member states?

"Sovereignty" needs to be re-defined, in terms and factors that are relevant in the 21st century. For example, borrowing from foreigners undermines Sovereignty., especially when the "real" investors are foreign governments/states (eg the Chinese Communist Party).

Sovereignty also depends on an entity's (eg country or EU) level of self-sufficiency in for rxample staple foods, energy and other basic elements that can keep it running in times of internal, regional or global crisis (eg the 2008 global staple foods & oil prices crises).

In that respect one can start talking of the Sovereignty of the EU (or the Eurozone17) as more achievable in our global and volatile era than that of its individual members!


B) The competitiveness Pact: EU or Eurozone based? EU framework or outside it (eg like Schengen)?

Germany has been complaining that other EU or Eurozone members want "its money" but not its ideas.

Recently it was also argued by various commentators in Germany and abroad, that the German economic model has gained appeal (eg to France).

IMO one should not forget how we got here.

That Germany and its influence on Euro monetary policy ie a "fixation" (by German central banking etc) with low inflation led to high Euro interest rates that led to an expensive Euro that led to suffocation of some many Euro firms & products by Chinese, US as well as UK and German ones in large part of the previous decade is as responsible as anyone for the 2010+ Euro crisis!

That except maybe for the NL, other Eurozone economies did not have much experience in producing exportable goods with high value/price ratio. But how many such "German" products can the EU and world markets absorb (and at what prices), should all of Eurozone17 becomes "German" (in economic modelling terms).

The pact cannot be part of the EU framework because the UK is part of the EU and would block economic governance rules to be included in the EU legal framework (even only for Eurozone members) or ask for "things" in return.

Hence a Schengen -like, outside the EU framework, pact becomes the only solution, partly because of the UK!

Why is Germany the one leading it? Among other reasons, because, alas, the 27 and even the 17 have not yet learned how to work as a team or delegate to such as the European Commission, etc.

C) The Bottom Line: Something must give

Hence, in a full of oxymora and Catch 22s (as always) crucial period for the history and future of Europe, Germany and France, 2 of the 6 founding members of the EEC( & 2 other original communities), had to take the lead, tactfully or not.

Not the best way possible, IMO, but necessary under the circumstances.

Could/can 17 sit down and elaborate a plan, w/o a draft from 1-2 of them first? In theory of team dynamics, it is possible, in practice though, very hard.

Anyway, let's see what additions and amendments the other 15 propose on March 11 (at the 1st Euro Summit)!

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Nick

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