Polish Foreign Minister Urges German Action On Euro

A blog about business and economics.
Nov. 29 2011 8:21 AM

Polish Foreign Minister Urges German Action On Euro

Radek Sikorski at the 2008 Munich Conference on Security Policy.

Harald Dettenborn / Munich Security Conference

The important development in Euroland yesterday was a speech by Polish foreign minister Radek Sikorski in which he urged the European Central Bank to take on lender of last resort functions (precisely what Germany has been urging it not to do) in exchange for stricter binding continent-wide fiscal rules (which Angela Merkel made the centerpiece of her European policy at the recent CDU party conference). The basic policy idea is not new, but the idea here seems to be to frame it in a certain kind of way that's designed the thread the various international tensions.

"I will probably be the first Polish foreign minister in history to say this," he said, "but here it is: I fear German power less than I am beginning to fear its inactivity."


The specific idea is to solve the crisis by having the ECB act as lender of last resort (which is basically what foreign economists have been saying for weeks needs to be done) plus this gigantic structural reform to European budget procedures:

Financial discipline would be strengthened by giving access to rescue funds only to members abiding by macro fiscal rules, by making sanctions automatic and giving the Commission, the Council and the Court of Justice powers to enforce the 3% ceiling on deficit and 60% ceiling on debt. Countries in excess deficit procedure would have to present their national budgets for approval by the Commission. The Commission would get powers to intervene in the policies of countries that could not fulfil their obligations. Countries persistently violating rules would have their voting rights suspended.

As I wrote yesterday, this idea will in many ways exacerbate the underlying problems with the Eurozone where divergent growth rates between different countries make it impossible to set appropriate monetary policy for everyone. At the same time, if this is the sweetener pill it takes to get the European Central Bank to do the job of a central bank it may be the best thing for the world.

Note that Poland itself has the good fortune to not be on the Euro. The problem Poland is facing is that a calamitous implosion of such a giant economic sphere is likely to be terrible for non-Eurozone countries and especially devastating to Poland, Sweden, Switzerland, and the United Kingdom which for obvious reasons of proximity have close economic ties to the zone. 

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



The Irritating Confidante

John Dickerson on Ben Bradlee’s fascinating relationship with John F. Kennedy.

My Father Invented Social Networking at a Girls’ Reform School in the 1930s

Renée Zellweger’s New Face Is Too Real

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

The All The President’s Men Scene That Captured Ben Bradlee

Medical Examiner

Is It Better to Be a Hero Like Batman?

Or an altruist like Bruce Wayne?


Driving in Circles

The autonomous Google car may never actually happen.

The World’s Human Rights Violators Are Signatories to the World’s Human Rights Treaties

How Punctual Are Germans?

  News & Politics
Oct. 22 2014 12:44 AM We Need More Ben Bradlees His relationship with John F. Kennedy shows what’s missing from today’s Washington journalism.
Oct. 21 2014 5:57 PM Soda and Fries Have Lost Their Charm for Both Consumers and Investors
Oct. 22 2014 9:51 AM What Was It Like to Work at NASA During the Challenger and Columbia Disasters?
  Double X
The XX Factor
Oct. 21 2014 3:03 PM Renée Zellweger’s New Face Is Too Real
  Slate Plus
Oct. 22 2014 6:00 AM Why It’s OK to Ask People What They Do David Plotz talks to two junior staffers about the lessons of Working.
Oct. 22 2014 9:54 AM The Simpsons World App Is Finally Here I feel like a kid in some kind of store.
Future Tense
Oct. 22 2014 8:43 AM Thunderstruck: Rock Out With Mother Nature’s Evil Side
  Health & Science
Wild Things
Oct. 22 2014 9:39 AM Gertjie and Lammie, a Magical (and Bizarre) Friendship
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.