Restoring confidence in the Eurozone

Speakers: Ferber Markus, Harms Rebecca
Moderator: Cendrowicz Leo

On Tuesday 14 May 2013, at the premises of Science14 Atrium in Brussels, PubAffairs Bruxelles hosted a debate concerning the issue of restoring confidence in the eurozone and in the European project in the light of the Cyprus bailout. The event was moderated by Mr Leo Cendrowicz, Brussels correspondent for Time magazine, while the discussants were Mrs Rebecca Harms MEP (Greens) and Mr Markus Ferber MEP (EPP).

In its first part, the event format allowed the discussants to answer two questions which were posed in advance to the audience, namely: “Is the eurozone on the right track?” and “Is the eurozone on the wrong track?”. In the second part, the speakers discussed in greater detail the ideas expressed in the preliminary statements, while, in the third part, a question & answer session of equal time-length to the debate concluded the exchange of views. Finally, the preliminary questions were asked to the audience for a second time.

In their first response, the audience appeared critical with regard to the current eurozone setting, as the majority of the attendees replied negatively to the former question and positively to the latter.

Rebecca Harms, the first discussant, expressed her concerns about the prolongation of the current critical situation of the eurozone, which is leading towards considerable economic and social gaps within and among EU member states. Ms Harms acknowledged that there are also some positive signals emerging and several promising initiatives which should tackle the core of the problem. These include the renewed single currency governance, “banking union” or new financial system regulations, which are currently under discussion.

Markus Ferber started by asserting that the euro is actually going in the right direction, despite the fact that the continued existence of the single currency is often called into question. Mr Ferber recognised that the eurozone has passed through difficult moments, while pointing out that the main question to be asked should concern which alternatives the eurozone has been and is confronted with. In his opinion, eurozone member states have often disregarded the long term effects of their budgetary policies; but the results achieved so far should be considered as acceptable.

One of the central issues of debate concerned the role of Germany within the European Union. Ms Harms stated that Germany has undermined its own interests both in economical and political terms. In Rebecca Harms’ opinion, the mistrust in the European project is igniting a new confrontation among European nations, beyond the social discontent which an economic crisis naturally brings about. Mr Ferber replied to these statements emphasising that several countries in Europe have lost economic competitiveness and that this last phenomenon should not to be attributed to the German stance with regard to Europe, but rather to internal causes.

With regards to the issues of structural and budgetary reforms both speakers agreed on the fact that the EU should create a new wave of measures, however, several divergences swiftly emerged. Ms Harms considered that the European Union should change its approach to managing public spending cuts by switching from austerity-oriented to sustainable-oriented measures and added that the European Union has often ignored the economic and macroeconomic imbalances which were created before and after the eurozone crisis erupted.

In her opinion, the positive signals of budgetary flexibility coming from Brussels are easing the pressure on weak eurozone members, nevertheless the targets set risk not being achieved in the following years due to the persistence of measures which ignore sustainability.

On these issues, Mr Ferber affirmed that public spending savings and productivity-oriented measures should still be taken into account as viable solutions, as the case of Ireland demonstrates. Mr Ferber then asserted that, in the last ten years, several European countries have implemented reforms improving competitiveness allowing them to better cope with the crisis. Hence, given that both the economic momentum and budgetary policies are still their responsibility, austerity-oriented measures are the result of a lack of reforms which should have been implemented by eurozone member states before the crisis.

With regard to the growth of the anti-europeanism and populist movements within the European Union, both speakers acknowledged the importance of this phenomenon, but differed in their evaluation. In fact, Mr Harms has several times stated her concerns for the long term effect of the crisis, while Mr Ferber expressed his optimism on the future of the eurozone.

Ms Harms stated that the crisis management, with particular regard to the scale of priorities adopted when dealing with the banking sector bailout and sovereign debt insolvency, contributed to the rise of left or right-wing anti-European parties in several member states and that these dynamics have weakened the hopes of a fully successful European project.

Whereas Mr Ferber affirmed that populist and anti-european sentiments are mainly due to the economic recession which notably favours the growth of political parties which offer simplistic responses to complex problems. In his opinion, these facts are confirmed by the success of anti-european movements in member states which have not adopted the euro and they should be reversed as soon as the eurozone finds its way out of the crisis.

Asked again on both preliminary questions, the audience did not substantially change its initial attitude towards the matters discussed.

Do you want to deepen the issues discussed in our debate? Check our list of selected sources which we have provided for you

EURO, Presseurope.eu

Presseurop.eu is a Paris-based news website publishing a daily selection of articles chosen from more than 200 international news titles, then translated into ten languages (English, German, French, Spanish, Romanian, Italian, Portuguese, Dutch, Polish and Czech).

BRUSSELS BLOG, Financial Times

The Brussels blog covers everything from the European Union’s foreign and economic policies to the fortunes of its political leaders – as well as the more light-hearted aspects of life in Europe.

EURO ZONE, Reuters.com

Reuters brings you the latest news from around the world, covering breaking news in business, politics, entertainment, and technology.

INSIGHT EU, Charles Jenkins

Created by Charles Jenkins, Insight EU is a blog which provides an ongoing analysis of the attempts of the euro zone to pull itself out of its crisis. It starts from a premise of support for the EU and euro projects, but recognises that the euro project is proving more risky than seemed to be the case in its early years.