Initial reluctance replaced by strong leadership

Luxembourg’s polit­i­cal class, as well as its Prime Min­is­ter and Pres­i­dent of the Euro­zone, seemed to ignore – at least at the begin­ning of the year 2010 – the real size of the Greek cri­sis. Jean-Claude Junck­er declared on 5 March 2010: “I don’t believe that the coun­try [Greece] needs help from out­side.”11Camille Ler­oux: Désunion, Le Quo­ti­di­en, 6 March 2010. Luxembourg’s pub­lic opin­ion had no under­stand­ing for xeno­phobe, pop­ulist head­lines as they appeared in Ger­man pop­u­lar press: “Greeks are lazy, cor­rupt and under­de­vel­oped!”22NDR Fernse­hen: Feindliche Berichte über Griechen­land, 10 March 2010, avail­able at: http://www3.ndr.de/sendungen/zapp/archiv/medien_politik/griechenland150.html (last access: 22 June 2010). Luxembourg’s pop­u­la­tion also knows that Euro­pean sol­i­dar­i­ty has its lim­its and it still remem­bers the loud and unfriend­ly, if not insult­ing, state­ments of Ger­man politi­cians made two years ago when Luxembourg’s fis­cal pol­i­cy was their focus.

When the full extent of the Greek cri­sis became obvi­ous in April 2010, even the Junck­er-friend­ly Lux­em­bour­gish press blamed the Pres­i­dent of the Euro group, recall­ing his over­ly opti­mistic dec­la­ra­tions made in March 2010: “We have the tor­ture instru­ments in the base­ment and we’ll show them if nec­es­sary.” The so-called “Greek con­spir­a­cy plot­ted by Amer­i­can hedge funds and invest­ment banks” leg­end was forged by Euro­pean politi­cians to divert pub­lic opinion’s focus from their own fail­ure.33Pierre Ley­ers: Euros nach Athen, Lux­em­burg­er Wort, 27 April 2010. This affir­ma­tion doesn’t stem from a nar­row-mind­ed Marx­ist-Lenin­ist ide­ol­o­gist, but was writ­ten by the edi­tor of the Catholic Church owned, main Lux­em­bour­gish news­pa­per Lux­em­burg­er Wort.

In fact, the Lux­em­bour­gish tax­pay­er has to bear a heav­ier bur­den than his Ger­man coun­ter­part, as Jean-Claude Junck­er point­ed out in an inter­view on a Ger­man radio sta­tion on 1 June 2010: “The net con­tri­bu­tion of the Lux­em­bour­gish tax­pay­ers for the Greek aid plan, as well as for whole Euro plan, is much high­er than the aver­age con­tri­bu­tion a Ger­man tax­pay­er has to bear.”44Bayern2: Der Euro und der Rück­tritt des Bun­de­spräsi­den­ten Horst Köh­ler, 1 June 2010. Even though the Lux­em­bour­gish con­sti­tu­tion would have allowed Finance Min­is­ter Frieden to pass the Greek aid plan with­out a par­lia­men­tary debate, the Finance Min­is­ter did so because of the enor­mous amount.55Cham­bre de députés, Pro­jet de loi N°6142. There was no real con­tra­dic­to­ry debate on help­ing Greece in Lux­em­bourg, unlike in Germany.

Alter­mon­di­al­ist and com­mu­nist ana­lysts blame the inter­na­tion­al finance mar­kets, which allow big banks to offer cred­it to Greece at high­er inter­est rates and hence to make even big­ger prof­its than before, at the expense of the work­ing class peo­ple. They denounce the cru­el aus­ter­i­ty pol­i­cy imposed on Greece. Only a rad­i­cal reform of the sys­tem can help pre­vent anoth­er “Greek cri­sis.”66David Wag­n­er: Le cheval de Troie, Woxx, 21 May 2010.

Green Mem­bers of Par­lia­ment and Mem­bers of the Euro­pean Par­lia­ment sent an open let­ter to the Pres­i­dent of the Euro group. They asked him to force banks to stick to their respon­si­bil­i­ties and pro­tect the Euro­zone against unfore­see­able, gam­bling finan­cial mar­kets, to cre­ate a pub­lic rat­ing agency and tax finan­cial trans­ac­tions. Lux­em­bourg, as a found­ing mem­ber of the Euro­pean Com­mu­ni­ties, should be a van­guard in the coor­di­nat­ed Euro­pean action against spec­u­la­tion.77Tage­blatt: Griechen­land – Krise, 7 May 2010.

Jean-Claude Junck­er him­self wants to imple­ment the Sta­bil­i­ty and Growth Pact with even more ener­gy. There­fore, it is absolute­ly nec­es­sary, in his eyes, to con­sol­i­date the bud­gets of the Euro­zone coun­tries, decide struc­tur­al reforms and to raise the com­pet­i­tive­ness of the econ­o­my. In the end, this pol­i­cy leads, accord­ing to Jean-Claude Junck­er, to some kind of “Euro­pean eco­nom­ic gov­er­nance”. The worst eco­nom­ic and finan­cial cri­sis since World War II can only be solved, accord­ing to Jean-Claude Junck­er, in a com­mon effort.88Ibid.

Does “a strong coor­di­na­tion of eco­nom­ic poli­cies in Europe” mean a kind of “eco­nom­ic gov­er­nance”? Some heads of gov­ern­ment will not be very pleased with this per­spec­tive. Are the mem­ber states ready to coor­di­nate their eco­nom­ic poli­cies?99Hort­ense Bentz: Die Rich­tung weisen, Lux­em­burg­er Wort, 25 March 2010. “Ger­many and France may both talk about enhanced eco­nom­ic gov­er­nance but they mean very dif­fer­ent things by it: for France, inter­ven­tion­ism; for Ger­many, the har­mon­i­sa­tion of rigour.”1010The Econ­o­mist: Charle­magne: Finan­cial fortress Europe, 14 May 2010.

Jean-Claude Junck­er revealed that “he had to bring a lot of patience to rec­on­cile French and Ger­man posi­tions con­cern­ing the sav­ing of the Euro.”1111Berlin­er Zeitung: Kopf­schüt­teln und Befrem­dung, 21 May 2010. Where­as Angela Merkel asks for an “eco­nom­ic gov­ern­ment” for the whole Euro­pean Union, Junck­er wants to begin with the cre­ation of a clos­er coop­er­a­tion of the eco­nom­ic poli­cies of the Euro­zone coun­tries.1212Taz.de: Mehr Ein­mis­chung, 20 May 2010.

The eco­nom­ic gov­er­nance of the Euro­zone needs pro­found reshap­ing regard­ing the Euro cri­sis. After the finance min­is­ters’ meet­ing in Madrid, Junck­er declared that he is on the same line as Olli Rehn: a strength­en­ing of bud­get sur­veil­lance is absolute­ly nec­es­sary.1313Le Quo­ti­di­en: Week­end laborieux à Madrid,19 April 2010.

Junck­er said that the mar­kets are react­ing irra­tional­ly. “There are expec­ta­tions that growth is slow­ing down because of the deficit cuts we have to take,”1414Busi­ness and Finance Dai­ly News Ser­vice, Junck­er says mar­kets irra­tional on euro, 20 May 2010. Junck­er said in Tokyo. “There is a cer­tain reluc­tance to believe the Greeks can over­come the cur­rent cri­sis. I don’t think the mar­kets are behav­ing in a ratio­nal way.” After hit­ting a four-year low, the Euro has edged high­er. How­ev­er, polit­i­cal divi­sions in Europe and fears of tighter finan­cial reg­u­la­tions after Germany’s uni­lat­er­al move to ban naked short sell­ing on some instru­ments kept investors edgy and stocks pres­sured. Junck­er said, “I’m con­cerned because the rapid­ness of the fall of the Euro is impres­sive. I’m not con­cerned as far as the cur­rent exchange rate is con­cerned.”1515Ibid.

Among the reme­dies dis­cussed on the back­ground of a dra­mat­i­cal­ly dete­ri­o­rat­ing sit­u­a­tion in the Euro­zone coun­tries is the intro­duc­tion of a com­mon bond. Jean-Claude Junck­er has backed the idea of a com­mon bond as a log­i­cal step for­ward in the devel­op­ment of the Euro­zone.1616Finan­cial Times: Com­mon bond could help sta­bi­lize the euro­zone, 20 May 2010.

A com­mu­nist polit­i­cal ana­lyst was the only one to vig­or­ous­ly crit­i­cise Juncker’s action as Pres­i­dent of the Euro group.

In Lux­em­bourg, polit­i­cal par­ty lead­ers and civ­il soci­ety rep­re­sen­ta­tives acknowl­edge the impor­tance of the Europe 2020 Strat­e­gy for the future devel­op­ment of the EU. But many ques­tions remain to be answered: Who is going to coor­di­nate the dif­fer­ent strate­gies? What will be the respon­si­bil­i­ties of this coor­di­na­tor? Every mem­ber state can define its own way to achieve the Strat­e­gy. Who is going to coor­di­nate the mem­ber states’ ways to act?1717Hort­ense Bentz: Die Rich­tung weisen, Lux­em­burg­er Wort, 25 March 2010.

Luxembourg’s Labour Min­is­ter Nico­las Schmit (Lux­em­bourg Social­ist Work­ers’ Par­ty – LSAP) fears a lack of coor­di­na­tion in the imple­men­ta­tion of the Europe 2020 Strat­e­gy: “Will the tra­di­tion­al ‘Schu­man method’ be replaced by a vague ‘coor­di­na­tion of poli­cies’?” If this hap­pened, the suc­cess of the Europe 2020 Strat­e­gy would be seri­ous­ly jeop­ar­dised.1818Europaforum.lu: Con­seil EPSCO, 8 July 2010, avail­able at: http://www.europaforum.public.lu/fr/actualites/2010/07/conseil-epsco-informel/index.html (last access: 14 July 2010).

A com­mu­nist polit­i­cal ana­lyst was very scep­ti­cal con­cern­ing the suc­cess of the Europe 2020 Strat­e­gy: in his eyes, it is not ambi­tion alone that is nec­es­sary to fight the rise of the unem­ploy­ment rate.1919Uli Brock­mey­er: Mit ihrem Latein am Ende, Zeitung vum Lёtze­buerg­er Vollek, 27 March 2010. Gen­er­al­ly speak­ing, there is a great scep­ti­cism con­cern­ing the suc­cess of the new Strategy.

    Footnotes

  • 1Camille Ler­oux: Désunion, Le Quo­ti­di­en, 6 March 2010.
  • 2NDR Fernse­hen: Feindliche Berichte über Griechen­land, 10 March 2010, avail­able at: http://www3.ndr.de/sendungen/zapp/archiv/medien_politik/griechenland150.html (last access: 22 June 2010).
  • 3Pierre Ley­ers: Euros nach Athen, Lux­em­burg­er Wort, 27 April 2010.
  • 4Bayern2: Der Euro und der Rück­tritt des Bun­de­spräsi­den­ten Horst Köh­ler, 1 June 2010.
  • 5Cham­bre de députés, Pro­jet de loi N°6142.
  • 6David Wag­n­er: Le cheval de Troie, Woxx, 21 May 2010.
  • 7Tage­blatt: Griechen­land – Krise, 7 May 2010.
  • 8Ibid.
  • 9Hort­ense Bentz: Die Rich­tung weisen, Lux­em­burg­er Wort, 25 March 2010.
  • 10The Econ­o­mist: Charle­magne: Finan­cial fortress Europe, 14 May 2010.
  • 11Berlin­er Zeitung: Kopf­schüt­teln und Befrem­dung, 21 May 2010.
  • 12Taz.de: Mehr Ein­mis­chung, 20 May 2010.
  • 13Le Quo­ti­di­en: Week­end laborieux à Madrid,19 April 2010.
  • 14Busi­ness and Finance Dai­ly News Ser­vice, Junck­er says mar­kets irra­tional on euro, 20 May 2010.
  • 15Ibid.
  • 16Finan­cial Times: Com­mon bond could help sta­bi­lize the euro­zone, 20 May 2010.
  • 17Hort­ense Bentz: Die Rich­tung weisen, Lux­em­burg­er Wort, 25 March 2010.
  • 18Europaforum.lu: Con­seil EPSCO, 8 July 2010, avail­able at: http://www.europaforum.public.lu/fr/actualites/2010/07/conseil-epsco-informel/index.html (last access: 14 July 2010).
  • 19Uli Brock­mey­er: Mit ihrem Latein am Ende, Zeitung vum Lёtze­buerg­er Vollek, 27 March 2010.

The reports focus on a report­ing peri­od from Decem­ber 2009 until May 2010. This sur­vey was con­duct­ed on the basis of a ques­tion­naire that has been elab­o­rat­ed in March and April 2010. Most of the 31 reports were deliv­ered in May 2010.

The EU-27 Watch No. 9 receives sig­nif­i­cant fund­ing from the Otto Wolff-Foun­da­tion, Cologne, in the frame­work of the ‘Dia­log Europa der Otto Wolff-Stiftung’, and finan­cial sup­port from the Euro­pean Com­mis­sion. The Euro­pean Com­mis­sion is not respon­si­ble for any use that may be made of the infor­ma­tion con­tained therein.