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Monday, October 13, 2014

Meet the new Belgian Finance Minister, an ally on EU reform

Good news for EU reform keeps coming from Belgium. After the publication of the new coalition agreement, which we've analysed here, it has today been announced that Johan Van Overtveldt will be the country's new Finance Minister. A former editor-in-chief of Belgian business magazine Trends, he was elected to the European Parliament in May with the New Flemish Alliance (N-VA) - Belgium's biggest political party and a member of the UK Conservatives' ECR group.

Van Overtveldt's pro-EU reform credentials are beyond doubt.

Last month, he said in an interview that he wanted "no political union" (see the headline in the picture), and added:
"We need a more social Europe, but first the monetary union should be anchored on a healthy basis. When national economies perform better economically, countries will start taking initiatives which go in a social direction anyway...A uniform European minimum wage, for example, is complete non-sense. It would at least need to differ for each country. A minimum wage is a sovereign competence of member states."
Furthermore, the new Belgian Finance Minister is a strong supporter of a 'capital markets union' - a key item on the agenda of the new EU Financial Services Commissioner, the UK's Lord Hill.

An expert in monetary economics (and a personal acquaintance of the late Nobel Prize winning economist Milton Friedman), Van Overtveldt also has an interesting take on the future of the Eurozone. In 2011, for instance, Open Europe hosted the launch of his book, 'The end of the Euro'. On that occasion, Van Overtveldt said he had "always been a doubter" of the sustainability of the single currency, and added:  
"The only solution for Greece is to leave the euro...in order to save itself and its democracy."
That said, Van Overtveldt has made clear that, despite his scepticism on whether the single currency may ultimately survive, he supports the efforts to keep the eurozone together. The new Belgian Finance Minister is in favour of "more economic powers for Europe", but opposes Eurobonds or fiscal transfers. This sounds very close to Germany's stance.

On banking union, Van Overtveldt wrote in April:
"The single resolution mechanism is too complex and takes too much time in order to be able to take action...The banking union as currently conceived leads to banks in weaker countries to do as much as they can to borrow from banks in stronger countries...Moral hazard is more than ever haunting the eurozone, like the Loch Ness monster."
Importantly, Van Overtveldt has also warned against a “big leap” towards fiscal union in the Eurozone, saying it would effectively create "two European Unions" - and, according to him, effectively lead to the end of the EU. Hence, we can expect the new Belgian Finance Minister to pay good attention to the concerns of the UK and other non-Eurozone countries when it comes to safeguarding the integrity of the single market.


David Horton said...

I’m not sure what we are supposed to think about this appointment. Somehow, I feel as if someone is trying to sell me a left-handed screwdriver.

Why then is the EU appointing another guy who appears to be rather EUsceptic?

I mean, you don’t need to look far to see that the cracks are showing. EU economy is weakening yet again. The Eurozone is sinking because of Greece & Spain and soon, Italy and France. There is robust international disenchantment with unfettered migration. Unemployment is running at 26m. Anti-EU parties are on the rise across the EU. Member state premiers are questioning the wisdom and sustainability of closer integration and the federal solution is seen by many as unwelcome and unworkable.

So the question therefore is what is the EU apparatus doing about it? You might think that it is listening and learning, as the appointment of Van Overtveldt might suggest. Perhaps there is acceptance that a change of tack is needed. A growing awareness that what they want, is not what the electorate want.

So yes, it seems that there is evidence that the message is getting through, at last. But is it? Is it really a pulling back, or merely a slowing down? Is the EU acknowledging that nations don’t want integration, or does it suggest that nations are merely yet to be convinced? It would be one of the oldest politicians tricks in the book. “We haven’t advanced yet but we have slowed the pace of the retreat.”

While EU appointments are mildly placatory, their dialogue isn’t yet. Juncker and others still seem to want to carry on as before. Toned down, but same message. Onward. Onward together.

We should not be fooled. The EU will not give away the authorities and powers it has invented or appropriated. It will not cease in its efforts to convince the people that federation is the future. The current pressure from EUsceptics is forcing them to act, but it is a con. By taking three steps forward and two steps back, we are still heading inexorably to this weird imperial dream of One Europe.

The impetus is with EU scepticism. If we can force the EU to slow down, it seems to me that we need to apply more pressure. We need to halt and then reverse integration. Now that UKIP has made the breakthrough into Westminster, I believe that more and more people will be mobilised into putting pressure onto the EU through the ballot box. Because the best way to force the EU to abandon its embedded vision of a federal Europe is for UK to tell them that we are leaving.

R Davis said...

The last few articles present a Busy, busy, busy moving forward & steady as she goes EU.
yet everywhere I read that the EU is finished all bar the shouting (?)
Maybe the tactic is - make them think that there is no choice & it is all set up already you can't back out now sorry.
Or is it Musical Chairs snatch & grab what you want before it is gone, on the part of the opportunists who may believe that there hip pocket will benefit from this venture.
Greedy little beans aren't they

Rik said...

Same very likely strategy we have seen in a lot of other places in Europe. Very similar as well as the reaction vis-a-vis populists.

Unlikely to stop the tide. People are simply not buying rhetoric anymore, at least most of them.
Combine this with an economy that will be crap for the forseeable future.

Belgium is a case by itself. There are similar trends, but the main one is the split French (basketcases) vs Flemish (large nett payers), with no love lost between the two groups.
Unlike nearly all other countries this seems to be more important (got established in the public political domain) than immigration, disenfranchising, EUsceptism etc.
This will give another dymamic.

Jesper said...

Banking union:
"The single resolution mechanism is too complex". Yep.

The banks are too complex and therefore it is almost inevitable that a single resolution mechanism will be too complex. Break up the banks that currently are too big and the complexity will be reduced sufficiently to have a simpler (still likely to be complicated) resolution mechanism.

Unknown said...

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