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EUROPEAN UNION

Hollande and Merkel deliver blow to Cameron

Germany and France have agreed to forge closer Eurozone ties without reopening the bloc’s treaties, a report in France has claimed. The move is seemingly designed to undermine UK Prime Minister David Cameron’s attempts to renegotiate his country’s ties to the EU.

Hollande and Merkel deliver blow to Cameron
Holland and Merkel appear to have made a move to ward off Cameron's attempts to open up EU treaties for renegotiation. Photo: AFP

France’s Le Monde newspaper revealed this week that French President François Hollande and German Chancellor Angela Merkel have agreed to forge a tighter political union among those countries in the single currency.

The newspaper said the agreement – written up by their aides on the margins of the recent Riga summit, represented a huge “No thanks” from the duo dubbed “Merklande”, to Cameron.

Over in Germany Die Welt newspaper said the agreement represented “Berlin and Paris showing Cameron the red card'.

It comes as the UK Prime Minister is due in Paris and Berlin later this week as part of his charm offensive to convince the leaders to allow Britain to renegotiate its ties with the EU, ahead of a planned In/Out referendum in the UK.

Cameron wants EU heads of state to agree to reopen treaties so he can renegotiate Britain’s ties to the EU and win back some powers from Brussels, while at the same time allowing for closer cooperation among eurozone nations.

The PM’s chief requirement is a change to laws surrounding access to benefits by EU migrants. Cameron wants restrictions on benefits unless migrants have lived in the country for four years.

He is also expected to demand an opt-out from one the EU's core principles of forging an “ever-closer union” between member states.

But it seems Hollande and Merkel have an entirely different agenda on the table. They want to see Eurozone reforms in four areas “developed in the framework of the current treaties in the years ahead.”

Those four areas are: economic policies, economic, tax and social convergence, financial stability and the governance of the single currency.

The Franco-German proposals will be put to a crucial EU summit in Brussels next month, where Cameron will also spell out exactly what he wants to change, if he is to campaign to keep Britain in the EU at the referendum.

Hollande and Merkel's initiative is set to be given the backing at the EU summit in June, which would effectively close the door to treaty renegotiation.

Their agreement gives Cameron plenty to think about before he heads to Paris on Thursday and then onto Berlin on Friday.

“Given that Cameron is about to go on tour around Europe and meet several heads of state, this move by Merkel and Hollande can’t be just coincidence,” Philippe Marliere, professor in French and European politics at the University College London told The Local.

“It’s clearly a signal of intent to show Cameron that ‘whatever he wants to get from us, we aren't budging when it comes to treaties and the monetary union’.

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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.

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