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Tuesday, March 12, 2013

Will the German Social Democracts come out in favour of debt pooling in the eurozone?

Last year we highlighted the German opposition’s somewhat ambiguous position on the hugely controversial proposition of debt mutualisation in the eurozone. However, with September’s elections rapidly approaching, it seems the SPD could have nailed their colours to the mast and have come out in favour, with their draft manifesto – launched yesterday by the party’s chancellor candidate Peer Steinbrück and party chairman Sigmar Gabriel (pictured) - claiming that the subject can “no longer remain taboo” according to Die Welt.

With the manifesto not yet publicly available (it has to be approved at the party’s national conference on April 14), we cannot be sure what form this would take – more limited mutualisation via a so-called debt-redemption fund or more extensive debt mutualisation via commonly issued eurobonds. With the German electorate reamining firmly against dept pooling, we suspect the former.

The party has also come out in favour of expanding the role of the European Commission into a ‘European government’ subject to control by the European Parliament and a second chamber where national governments would be represented, although it must be said that this concept has already been floated both by Angela Merkel and also by the ‘Future of Europe’ group chaired by Guido Westerwelle.

It will be interesting to see what effect – if any – this has on the SPD's electoral fortunes (we can imagine that the new 'Alternative for Germany' anti-euro party making this a big issue). At the moment the party is struggling to break through the 30% barrier in opinion polls and has been as low as 23% in recent weeks.

In addition to the dynamics of German domestic politics, from the perspective of the UK, this debate is both interesting and relevant given that any of the changes proposed above would require changing the EU Treaties, thereby giving the UK the opportunity of putting forward some reform proposals of its own, as suggested by David Cameron in his recent speech.


Rik said...

Brilliant strategy it makes themselves unpopular and if AfD might work (doubtful unless they can come up with some person that does well in the media) they get a lot of free publicity.
A negative item in the German equivalent of The Guardian or on the BBC is the best recommandation for 10s % of the voters) towards the voter gives a clear target to campaign against.

An organisation is of less importance unless for getting publicity if the way via the media doesnot work. Wilders, Fortuijn in Holland and Grillo show you need one guy. And preferable the other side media getting in unreasonably with a stretched leg. When these most of the time leftist media start to make issues that 10s of percenbt of the people think ridiculous you got them.
But AfD looks like a boring crowd. Bit like Krugman. Doesnot get his message through to other people than are already in his camp. Simple language is not enough. You need simple message, not counterintuitive, not brought by a guy who looks to be clearly in one camp. Adressed to people who have now another view but could be persuaded to change that. That is for Krugman (missing out on the last 4 points) for AfD you need to present yourself as a real alternative to the potential voters who are there and of whom a lot are not the smartest (bit different in that respect). People that are probably already turned or close to turning away from politics. Outsider, clearly different from the present gang.
AfD could start to work if they as a party, not some vague alternative as now, in the polls get some votes. Very likley put the CDU under pressure. Basically what the UKIP is doing in the UK and what Cameron is missing time and time again. As traditional aprty you have to react and react fast in the UK you now have created an alternative that might not go away. Cameron missed again after his successful EU strategy the opportunity to do so. Bring no issues up that irritate your own right unless absolutely necessary. Reach a hand to especially the UKIP voter, take them really serious. Appologise for earlier remarks. Merkel is unlikley to make the same mistake. If AfD works she will act and much faster than Dave. She understands that her weak point is her right moving to the middle make you funerable there. But it works as long as there is no alternative.
Governing is another cup of tea you need proper people for that.

SPD is not going to make it unless Merkel messes everything up big time. Which is still possible with alot of European events in the pipeline.
Basically their leader like Mr ED simply doesnot look like PM material and that will turn a lot of people off at the day of the vote. Plain talk is a positive, looking like a semi-moron as Steinbruck generally does is not.
Steinbruck also still misses that more than half of the voters on the left want their interests defended and are only interested in a fair society as far as it benefits themselves.

jon livesey said...

If you simply replace each reference to "Europe" in this piece with "euro zone" then this will suit the UK perfectly.

Let euro zone integration continue, and let Brussels gradually become the Government of the euro zone, with as many chambers as needed - ten if they want - and let the non-euro members of the single market return to a Free Trade relationship with the euro zone.

Although this story is written from the point of view of the SDP's policy on Europe, you could just as well have written that the SDP is now in favour of a two-speed EU, the euro zone and the rest.

One this is clear. No non-euro member of the Single Market is ever going to sign up for a European Government in which they would perpetually be out-voted by the members of a currency they don't belong to.

That would be too much a case of surrendering your freedom of action in return for precisely nothing.

Rik said...

Fully agree.
The EZ needs further integration to work (well that is what they think anyway, I donot see it working myself to be honest).
So forming a block.

On the other hand normal countries like Danemark, Sweden, the UK will not touch the Euro with a pole and rightly so. The only ones that will join are the eastern part who see it as a safeguard against Russia and a new source of free money (let say it as it is). Basically countries the EZ would be better off without simply even more unstable than the South in most cases.

Leaving the nett contributors with no other choice than avoiding anymore integration as they could easily be outvoted (see eg bankbonus).

Effectively splitting the EU at least in 2 parts.
And requiring a treatychange that will see not only the UK and Co but also several Northern countries wanting powers back (while at the same time transferring other powers to brussels to come to some sort of working Euro arrangement.

Well if it doesnot fall apart beforehand. One voter-ignited exit might kill the whole thing. And we probaly have a decade or so in 17 countries for that. Well probably not in all 17 but in say 8 or 9 important ones. Stats say order a coffin.

Anonymous said...

European government? Give me a break!

If that really happens I will reexamine my decision to give up my citizenship.