Tag Archive: European debt crisis

The EU Sovereign Debt Crisis: Some Legal Causes








Newly Revised EU Financial Regulation Emphasizes Fiscal Accountability in Member States





Germany’s Rejection of European Stabilization Mechanism Threatens Economic Recovery







Greek Financial Crisis and a Possible Exit





Proposed Expansion of European Central Bank Power

The European Commission has called for a mass overhaul of the current banking system in the Eurozone. It involves the European Central Bank being allowed to monitor banks in each of the 17 countries that use the euro. This in an attempt to deal with the monetary crisis in the Eurozone.

The European Central Bank (ECB) was created in 1998 prior to the adoption of the euro as common currency for Europe.The ECB’s current role is setting interest rates and printing money, but this proposition would expand its power to allowing the institution to monitor banks more closely in their everyday business practices.  There are staunch supporters as well as those who oppose this proposal for many different reasons.

The opposition includes some non-Eurozone countries that are concerned with the effect that this banking union would have on their banks. For instance Sweden and Denmark are concerned with having to bail out weak Eurozone banks or having to relinquish some of their power to run their own banks. These non-eurozone countries do not want to weaken “national supervision”, and this banking union proposal has caused some countries to re-consider adopting the euro as currency. Moreover some EU officials are apprehensive about the ECB being able to dictate the direction of banking policy and legislation surrounding those policies, and whether or not expanding the powers will actually help.   Some member states want to “keep them {ECB} at arms length as it’s none of their business”.

In contrast some support the expansion of the ECB’s power because of the institutions budgetary reforms and steadfastness during the fiscal crisis.  For instance,  Jörg Asmussen believes that ECB’s approach was necessary but that there must be controls subject to parliamentary and judicial review, and that it’s difficult to have a common currency without common fiscal policies. In addition France’s Financial Minister, Pierre Moscovici, does not think issues surrounding the banking union will prevent the legislation from being passed before the end of this year.

Either way the heads of European Parliament and Council have to approve this legislation before any major changes can take effect, and it seems that this will be a hard fought battle whatever the outcome may be in the end.

EU or National Government Solution To Illegal Immigration?






The Future of the EU and the Euro

According to German government sources, German Chancellor Angela Merkel seeks further reform of the Lisbon Treaty (“Treaty”).  Just last month, Merkel convinced her fellow European heads of state to explore the possibility of further economic integration within the EU.   One possible way of accomplishing this further integration, according to Merkel, is through limited Treaty changes.  The central theme of her proposed Treaty changes is to grant the EU institutions greater control over Member State budgets.

This control would be distributed among three of the EU Institutions: the Commission, Council, and the ECJ.  The Commission’s role would be strengthened through closer monitoring of Member States under the excessive deficit procedure.  Furthermore, the Member State would submit its draft national budget to the Commission who would then forward the budge to the Council with its recommendations.  The Council would then adopt an opinion on the budget before its adoption by the Member State’s legislative body.  However under TFEU Art. 288, a Council opinion is not binding on the Member State.  Merkel has also suggested the ECJ should monitor the Stability and Growth Pact (“SGP”) obligations that lead to the excessive deficit procedure.  Under this proposal, the ECJ would have the power to review the Member  State’s budget and possibly declare it null and void.

Merkel’s suggestion to grant the ECJ power to declare Member State’s budgets null and void has not been included in her proposals at the EU Summit.  The furthest EU involvement in Member State budgets under the current proposals involves modification of the Treaty to include sanctions for SGP breaches.  This could largely be attributed to a recent ruling by the German Constitutional Court on challenges to the Euro Rescue Package.  In its September 7th ruling, the Court found the current rescue package constitutional.  Yet the Court cautioned that the German Constitution requires full budget sovereignty be maintained through approval by the German Bundestag’s Budget Committee.  It is surprising that Merkel would even suggest such EU intervention into national sovereignty because it seems to be in direct conflict with her own nation’s constitution.  However with the current European debt crisis spreading that in turn leads to more requests for contributions from Germany, she could be just voicing the rising frustration of her countrymen and women.

“Robin Hood Tax”: Proposal To Tax Financial Institutions

Finance leaders from European Union Member States have been debating a proposal to levy taxes on financial institutions throughout the European Union. The proposal is one that might provide revenue as leaders look to address the debt crisis. French and German officials, including President Sarkozy, have strongly advocated for the tax which they consider imperative to raise funds.

A consensus has not been reached, either among leaders from the European Union as a whole or within the Eurozone. Swedish, United Kingdom and Irish governmental officials have all expressed concerns about the tax.

George Osborne MP, United Kingdom Chancellor of the Exchequer, has made strong remarks reflecting his opposition to the proposal. Specifically, his concerns are that this “Tobin” or “Robin Hood” tax would not be paid by financial institutions. Osborne is convinced that the tax will be passed on to consumers.

Within the Eurozone, the reception from Italian and Dutch governmental officials is lukewarm – both governments will further explore the idea within the constructs of the respective national government.

In the absence of a consensus amongl Member States, there is some support for the Eurozone Member States to impose the tax by acting separately from the remaining Member States. This debate illuminates underlying tension among Member States about who should bear the cost of the debt crisis.

The Debt Crisis Impact on the United Kingdom

The continued discussion of the European debt crisis has driven speculation and discussion about what the European Union will look like in the future. In the United Kingdom specifically, news outlets reflect the public eurosceptic sentiment through their coverage of the crisis.

By way of background, the United Kingdom is not one of the Member States part of the “Eurozone,” the seventeen Member States that have adopted the Euro and closer economic ties.

Heightened speculation comes after attempts by some British Members of Parliament, including some in Prime Minister Cameron’s party, to seek a national referendum to discuss withdrawal from the Union. While the proposed legislation failed to garner sufficient votes, the introduction of the proposal to Parliament underscores an internal political debate on the United Kingdom’s future within the European Union.

Reaction to European Union negotiations were addressed in one article which advocates that the United Kingdom distance itself from the Eurozone and the Union itself. The article urges a strong united bargaining front led by Prime Minister David Cameron to protect the interests of the people of the United Kingdom.

Another article foresees Eurozone Member States strengthening the European Union, at least as it applies to economic policy. As of yet, there is not a consensus on what should (or may) be done to unite Members of Parliament in pursuit of one course of action.

While it seems that negotiations on addressing the debt crisis have arrived at some conclusion, at least one question remains. What will come of the heated internal debate which centers on the United Kingdom’s ties with the European Union?



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