There are many conversations I would like to be a party to. But for EU purposes any self-respecting eavesdropper ought to be somewhere near German chancellor Angela Merkel and her Slovak counterpart Iveta Radicova on Wednesday. The concept of ‘EU solidarity’ lurks as a conversation centre-piece at their meeting in Berlin.
Sounding more German than the Germans and then going one step further, Slovakia incurred the wrath of both Berlin and Brussels when its parliament earlier this month voted against putting €816 million into a €110 billion Greek bailout fund.
The tone was unrepentant on the day and remains so. After parliamentarians voted 69 to 2 votes against, Radicova, who made this a campaign theme before the elections, underlined how much hardship her country went implementing an austerity programme in 2000 without any external help.
Maintaining the line, Slovak foreign minister Mikulas Dzurinda on Sunday told German press agency DPA:
“At that time we had a drop in real incomes of eight per cent. Unemployment climbed up to 20 per cent. At the end however we overhauled the economy and were the first former Eastern-bloc country ready to join the eurozone.’
Dzurinda, previously prime minister for eight years until 2006, oversaw the harsh measures. Slovakia only joined the single currency last year and remains much poorer than Greece. And so the prospect of paying out rankles.
The move will not have any effect on the overall Greek loan as the rest of the eurozone members have approved it. And the parliament did approve the €4.4bn commitment to the euro area’s €440bn European Financial Stability Facility, a fund meant to stop the Greek crisis spreading. But it was an affront to eurozone sensibilities all the same.
“All member states committed themselves politically to assistance for Greece. Every member relies on solidarity; solidarity is no one-way street,” said Merkel’s spokesman.
EU economic and monetary affairs commissioner Olli Rehn said:
“I can only regret this breach of solidarity within the euro area and I expect the Eurogroup and the Ecofin Council to return to the matter in their next meeting.”
EU solidarity. It’s a nice concept but scratch at it and it proves to be thinly spread on many issues. I wonder what Merkel might have to say on it. The chancellor, it might be remembered, procrastinated for several months and allowed the public discussion on Greece to turn extremely ugly before agreeing to a bailout mechanism for the indebted country. The real risk of the collapse of the eurozone and as well as German banks’ exposure in Greece formed the backdrop to the decision. It was a pragmatic move after certain reform promises were promised by Athens in return.
In short, Germany could not afford, either for its own or the EU’s sake, not to bail out Greece. And it is now working on the EU’s rules to make sure it is never put into such a position again. Let’s not dress it up as solidarity.
A recent FT Deutschland headline on the meeting suggests Merkel wants to bring Slovakia to its “senses.” That might be difficult. It was a sovereign decision by the country’s parliament after all and Bratislava has okayed its share of the more general bailout fund. Domestically-speaking it would be almost impossible for Radicova to do a u-turn – particularly as the Slovak government has couched the parliament’s refusal in terms of solidarity for the Slovak people.
#1 by Damien on August 24, 2010 - 9:13 pm
There is some truth in what Radicova believes. The best medicine for Greece is indeed going to hurt. The bailout fund is not intended to stop a much needed adjustment in Greece but rather to give confidence to the markets that a state will not default, an event that would cripple throughout a weakened eurozone.
But what Merkel and the rest of the EU is trying to do with this bail out fund is to stop contagion spreading to other troubled countries like Ireland and Spain. It is this, rather than bailing out the Greeks per se.
#2 by E Roobeek on August 25, 2010 - 1:52 pm
While the Slovakian argument seems quite reasonable – for me in particular the paradoxical part about poorer countries bailing out (arguably) richer ones – it should also pointed out that “overhauling the economy” when the rest of the world is at the height of the internet bubble is something different altogether than doing it when the rest of the world is in crisis.
#3 by Richard on August 26, 2010 - 2:04 am
I copletely agree with refusal to pay Greece. And when I say pay, I mean pay, not loan, because those money would never come back.
So to sum up, since when does solidarity mean ‘giving resources FROM poor and abstemious one TO irresponsible, corrupt and deceiving one’?
#4 by Richard on August 26, 2010 - 3:03 am
Also, its clear that those money are for French and German banks which own more than 70 percent of Greek debt. These money will only worsen the problem and delay the consequences.
Greece is the firtst victim of ‘so called’ Socialists and their populist agenda. All they do is full their pockets with dirty money while working silently in the interest of the wealthy and influential gropus. All it takes are really brainwashed and/or primitive people, little bit of press/media control and talk about some unrealistic but popular promises.
So, what will hapen when they pay their debt to banks? Greece will probably bankrupt. We can see those protests in their streets. They can’t change their attitude like Czechs or Slovaks back in the day and even now again! Here in Slovakia, we saw what a corrupt socialist government can do to a country and I call it treason!
Regarding the huge bailout fund, it should be clear that Slovakia will participate only in if the most strict criteria for austerity will be met, so that the help is actually realistic. Otherwise this fund money is just a hypothetic and should work for stabilisation at best.
#5 by Stan on August 26, 2010 - 4:33 pm
The only reason Merkel and Rehn are trying to sell the ‘solidarity’ point is to fight for the public opinion. They made a hugely unpopular decision (the bailout) and Radicova made the popular one. Unfortunately for Merkel, no the german public refuses to see Radicova as a villain no matter what they say. Just look up the interview with Radicova on Die Welt and the dozens of comments from the readers of the online version.
And speaking about solidarity – what exactly is it? It’s managing the resources in a society (in this case the society being the EU countries) as to ensure the common well being of all members. One of the resources here is the European Currency – and what did the Greeks do with it? With their bad financial policy and overspending they undermined the stability, value and the trustworthiness of Euro. They made the Eurozone worse for everybody – whether the richer or the poorer countries. How’s that for a breach of solidarity?!
#6 by Oisín on August 26, 2010 - 4:55 pm
For Slovakia to give into this bailout would be like lending your bike to someone who had just pushed theirs off of a cliff. It is best they pedal backwards.
#7 by Pedro on August 26, 2010 - 11:13 pm
The Greek government deserves absolutely no sympathy! They willingly and knowingly deceived the EU with false data in order to meet the EMU criteria. If they had not lied and cheated, they (and the eurozone) would not be in this mess.
#8 by DOCM on August 27, 2010 - 11:48 am
Your commentary is fair enough but the real issue is not that of trying to define “solidarity” (which is no more than a slogan) but of Member States abiding by their agreements. Both Slovakia and Germany have been failing – politically – in this respect, Slovakia in this instance and Germany in the context of EMU generally by insisting on legal niceties when it suits German interests and dismissing them when it does not (notably in raising the prospect of expelling states from the euro).
It is hardly surprising that the Slovak Prime Minister seems to misunderstand the role of the Commission and, indeed, to seem to be contemptuous of it, when the leaders of the larger Member States, notably France and Germany, give such poor example.
Thankfully, the forces of reality are stronger than those of some of the participants. The wisdom of Jacques Delors when he said the following (in an interview in Le Figaro on 15/6) is being borne out by events.
“Nous assistons à une désagrégation institutionnelle. On détruit la méthode communautaire sans avoir trouvé un autre système. Pourtant, chaque fois que l’Europe a avancé, cela s’est fait grâce à cette méthode”.
By way of example, the French Prime Minister is now inviting the Commission to intervene in the Roma issue and to use the powers available under the treaties to try and deal with it. The limitations of the intergovernmental approach in the context of the report being prepared by Van Rompuy (including a reported dispute on the treatment of the cost of pension reforms) must be evident to even the most blinkered participants at this stage. And, of course, as you have expertly reported, the decision of the German Constitutional Court in the Mangold case avoids what could have been (i) a major point of rupture in the business of the EU and (ii) pulls the carpet from under the eurosceptic elements in German public opinion of which the Court risked being seen as the mouthpiece. It also augurs well for any decision in relation to outstanding cases that risk undermining the euro.
P.S. The European Financial Stabilisation Mechanism was established by way of an EU regulation which came into force on the date of its publication in the OJ on 12 May 2010. The element requiring approval at a national level seems to me to relate only to the associated SPV – established under Luxembourg private law – for the wider “shock and awe” package.
#9 by Richard on August 27, 2010 - 5:14 pm
By the way, it seem like no one cares that help to Greece by EU member countries is STRICTLY AGAINST the Treaty of Lisabon which was (in some cases quite forcefully) accepted by the same EU member countries.
I wonder if there is any better definition of IRONY.
#10 by Marcel on September 8, 2010 - 8:51 pm
The whole setup of the socalled bailout fund is 100% illegal anyway, no wonder the democracy-hating pro EU types love it. They hate the people and hate democracy and love elitist rule.