SHARE
COPY LINK

EUROPEAN UNION

Hollande and Merkel plan EU budget stance

French and German leaders will hold talks before an EU summit later on Thursday over the bloc's seven-year budget, both capitals said, with Berlin adding it would be "no drama" if no deal was done.

Hollande and Merkel plan EU budget stance
European Council

The office of French President François Hollande said he would meet German Chancellor Angela Merkel at 5:15 pm local time (1615 GMT) before the Brussels talks.

But a senior government source in Berlin said he did not expect Europe's power couple to go into the summit with a "formal common position."

The summit, beginning late Thursday and already slated to stretch into the weekend, promises to expose deep rifts in a European Union already mired in economic crisis.

But another government source in Berlin, who spoke on condition of anonymity, sought to play down the importance of striking a deal at these talks.

"The federal government is well prepared and is going with the purpose of contributing to a deal," this source said.

"If it turns out in the process of the talks on Thursday and Friday that it has to be a two-step process, then this is not a drama," he added.

The official said Berlin was hoping for a "realistic" ceiling on the seven-year budget, but would not be drawn on concrete figures.

But he added that the austerity being implemented across Europe should also be taken into account when negotiating how much the EU should receive from its members.

"For us it is important that the EU budget can make a contribution to budgetary consolidation," this source said."We are negotiating over an EU budget in a very unusual situation in which there is a lot of pressure on member states' budgets and this must play a role in the negotiations," he added.

The talks were likely to pit rich countries like Germany and Britain, which pay in most to the EU budget, against poorer countries mainly from the south and east, which rely heavily on European funds.

All 27 countries enjoy a veto in the negotiations and several have threatened to wield it if their demands are not met, prompting Merkel on Wednesday to raise the spectre of a new summit next year.

As Europe's biggest economy and cash cow, Germany pays most into the EU pot both in net and real terms.

And Berlin has joined a group of eight countries, led by Britain, calling for spending cuts, although this group is far from united on how deep the EU budget should be slashed.

Lined up against these countries is a group of poorer nations – net recipients of so-called cohesion funds designed to help less affluent regions of Europe catch up with the rest.

The source noted that such budget negotiations usually go down to the wire and that leaders have in fact until the beginning of 2014 to clinch a deal.

The EU was "well within the timing framework" required to get an agreement eventually, the source said.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

SHOW COMMENTS