XXII Economic Forum

Eurozone: a political crisis too?

4 September 2012 at 17.00

in cooperation with the Luxembourg Institute for European and International Studies (LIEIS)

Debate Summary

The present-day problems of Euroland countries raise a question if the project of introducing euro had any chances of success at all, and also what can we do to repair this situation? – asked Armand Clesse, a director of Luxembourg Institute for European and International Studies.

Within the recent 5 years, Europe attempted to employ every method of overcoming the crisis. In 2008 it turned towards Keynes, and in turn in the years 2010-11 a race began for as fast as possible introduction of fiscal discipline, yet it proved quickly that it had a negative influence on the growth of GDP – said Zoltan Csefalvay, Deputy Minister of Economy of Hungary. In his view, we should wait for the end of this difficult time and struggle for fiscal consolidation.

A different opinion was expressed by Heiner Flassbeck, a Director of Globalization Department from UN UNCTAD. – Europe must climb out of recession as soon as possible, and it won’t succeed only by cutting expenses. The situation of no return to growth threatens a political eruption and other consequences, which are difficult to estimate. If unemployment continues to rise, frustration in the society will become even stronger – he warned.

Others preferred to tone down the atmosphere. – Euro is more stable as a currency than German mark, regarded, as a matter of fact, to be very strong. In fact there is no such thing as a euro crisis; we have rather to do with debt crisis, which must be solved – said Helmut Werner from the European Parliament.

There must be rules that will immediately imply serious penalties – said Ivan Miklos, former Slovakian Minister of Finance. – Nevertheless, the Eurozone has been built since the beginning on rules, which have been in fact many times broken – replied Csefalvay. – The matter is exactly to automatically enforce penalties for breaking rules, instead of discussing or negotiating them continuously.

(Source: Economic Forum)

Does the Eurozone equal a political crisis?

- The present-day problems of Euroland countries raise a question if the project of introducing euro had any chances of success at all, and also what can we do to repair this situation? – asked Armand Clesse, a director of Luxembourg Institute for European and International Studies.

- Within the recent 5 years, Europe attempted to employ every method of overcoming the crisis. In 2008 it turned towards Keynes, and in turn in the years 2010-11 a race began for as fast as possible introduction of fiscal discipline, yet it proved quickly that it had a negative influence on the growth of GDP – said Zoltan Csefalvay, Deputy Minister of Economy of Hungary. In his view, we should wait for the end of this difficult time and struggle for fiscal consolidation.

- There must be rules that will immediately imply serious penalties – said Ivan Miklos, former Slovakian Minister of Finance. – Nevertheless, the Eurozone has been built since the beginning on rules, which have been in fact many times broken – replied Csefalvay. – The matter is exactly to automatically enforce penalties for breaking rules, instead of discussing or
negotiating them continuously.

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