eye on the economy
NEW EURO- ZONE
It is not the first time that Ireland, willingly or unwill- ingly, contributed to European governance. It can be said to have invented the modern political party, or have been the first colony to win independence. Now it may be the progenitor of a new eurozone order. There will be no flashing lights, of the kind that greeted
the euro in 1999, this time. Certainly no celebrations. Any new order will be born out of crisis, but the effects could be just as profound as the single currency’s creation. That is never an ideal way to make policy. And even as a
crisis, it was badly handled. It is quite a contest between Dublin, Berlin and Frankfurt as to who made the biggest muddle. One has to award this wooden spoon to German
Chancellor Angela Merkel. Even as the intense negotia- tions with Ireland were taking place, the Governor of the Bank of France, Christian Noyer, was openly blaming Merkel’s speech for the crisis. The civilised façade which usually covers European
affairs has been ripped open by this one. Noyer’s was only one of a string of astonishing comments by ECB governors. Behind thismust lie dismay at both the speech and the deal
Brendan Keenan
ORDER?
Ireland’s crisismay inadvertently contribute to a new model for European governance. Surely a permanent crisis mechanismof the kind being fiercely debated in Europe is now inevitable, says Brendan Keenan
between France and Germany to maintain political over- sight of sanctions for countries with excessive deficits.
Strategic failure Behind this lies a strategic failure at the heart of the euro project – what exactly is it? If it ismerely a voluntary deci- sion by countries to abandon their national currencies, then they must live with the consequences. The conse- quences could include stagnation, over-heating, loss of com- petitiveness or large budget deficits, if the country does not handle membership well. These could be followed by crisis, default, or even depar-
ture from the euro. If those were the rules, markets would respond accordingly. Their responses would provide a use- ful automatic stabiliser which would help – though not entirely prevent – things getting out of hand. On the other hand, if the euro is a final, permanentmon-
etary union, it becomes a collective endeavour. Risk is bound to be shared to some extent, and it is in everyone’s interest to share responsibility as well. The model is perfectly clear in the great federal unions such as the US. The individual states have their own
Winter 2010 Irish Director 19
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84