February 19, 2009
This is the first time that East –Europe needs West –Europe helps as the members of the Union.. This is also the first time when the so – called European cooperation is tested. The stakes are high, even for West-Europe.
The majority of the banks in East-Europe are in foreign hands, mostly in German, Austrian, Greek banks. If their customer would not be able to pay their monthly installment on their mortgages it would create ripples even in the relatively safe West-Europe countries.
The continous attack against the East’ countries money market and their high money lending rates are showing that the trust in their macro –economic and financial stability is low, which includes the low credibility of their banks.
The fate of East Europe is therefore eminently a European issue – an intra-Europe issue.
This is the first time that the extended European economic cooperation ( called European Union) is under a severe test. This is the first time that the most developed countries must deal with their relatively under-developed neighbours . The very form of this link, the economic cooperation must prove its worthiness.
The EU Comission warned Hungary to cut more state expenses in order to keep the country’s finance under controll. I did not hear that the same institution warned with the same speed and urgency the government of the UK on the same, although the UK ’s projected public debt is climbing up to the critical level of 10 per cent. This is the level that was said to be untenable in Hungary’s case. Hungary has promised an about 3 per cent level for this year. EU Comission’s tone is unexplainable given this big difference between the two countries financial affair.
But it is not just about talking. East-Europe is in Western hands. Their financial system is closely linked to the West, their market plays a significant role in buying Western goods, their firms are working for big West companies.
So far I did not see that Western politicians understand it. Sarkozy is helping French industry. Merkel is considerint Germany’s situation. There is no one who take into consideration of the East countries situation.
In the press, much word is spent Russia, the US, China and their interlinkedness. But East-Europe is not Russia. See that their is a vast land that incorporates millions of people who are important citizens of the common European good and important buyers of the European goods.
On European unity – This is the right time to measure how Europe as a unity works. This is the right test to see whether the West-Europe’s press is interested in the fate of the Community and reports on the need for a Europe-wide coordination.
I suppose that any inquiry on this subject would find the number of articles are closer to nil than to the many.
European institutions, like EBRD,EIB helped with money. But the problems run deeper. What happens with this money? Who controlls their spending? What is the purpose of their lending?
There are several other questions to ponder swiftly and act on them quckily:
On banking –
· Everybody is sure that Europe’s bank had enough reserve to sustain a crowded default on East-E’s mortgage markets?
· West-E’s government’s are ready to back their banks in their foreign investments in East-Eu?
On markets –
· Europe is not a big enough market to think in European wide coordination and cooperation?
· the big EU countries interest lies more in the world ( China, India, US ) than in their neighbours fate? If people in East-Eu would default, whose problem would it be? The Chinese government’s? Or that of the Australian?
· What does it need to restore confidence in East-European countries markets? What could Eu’s governments do to prop their weak fellows up?
On political unity –
· the Lisbon treaty’s significance is close to zero when we consider the problems East-Eu countries are facing – does it not need more consideration than the nitty-gritty of the would be Union and their refusal by the Irish people?
On the merit of the European Union –
· Everybody who is really pro-European must answer the question that how much the close cooperation of the European countries, the EU helps its members in surviving the crisis than it would happen without the EU. If the answer concludes in the negative, it will show how much this EU would develop in the foreseeable future?
· the common European money is a cheap excuse for the merit of the union. Because this crisis threatens the very existence of the the common money. Or, rather, it explicitly shows the merits and the hurdles it creates.
· the common currency is a technical issue in comparison with the help ( and the integration) of the East-European countries
The developed EU countries must assure their neighbours and fellow members that their presence in the Union merits consideration, help and focused policy coordination.
What needs to happen to prove that this important issue?Péter Kóczián