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Eurozone proposals fail to pose effective solutions to crisis – Carthy

1 June, 2017 - by Matt Carthy MEP

Sinn Féin MEP Matt Carthy has commented on the European Commission’s “reflection paper" on the future of the Economic and Monetary Union that was published this week.

Carthy, a member of the Economic and Monetary Affairs Committee, said:

“The proposals to deepen the Economic and Monetary Union entirely fail to address the problems caused by the structural flaws of the euro.

“The flaws in the design and functioning of the euro are becoming clearer and clearer.

"There is one positive element of this reflection paper – the Commission finally recognises the status quo, and the divergence it has led to, is unsustainable and has to change.”

“But let’s face it – this reflection paper is not so much a new proposal from the Commission as it is the product of a political compromise between Merkel and Macron arising from their recent discussions.

"Reading between the lines, we can see that the longstanding French demand for some limited transfers is proposed, in exchange for not mentioning the massive and destructive German trade surplus.

"The reflection paper calls for deepening economic integration and proposes the creation of a European Unemployment Insurance Scheme and an ‘investment protection programme’ to ensure public investment is maintained during an economic downturn.

“I am in favour of the use of redistributive transfers to the so-called peripheral states to correct the imbalances that damage our economies, and of course I am in favour of protecting investment levels in the crisis-hit countries,” Carthy said.

“But it is contradictory nonsense to create an ‘investment protection scheme’ to protect investment during economic downturns while at the same time insisting on keeping the macroeconomic straightjacket of the Fiscal Compact firmly in place.

“In typical Commission fashion, the idea of a European Unemployment Insurance Scheme is dangled to gain public support – while the trade-off is the ‘harmonisation’ of labour relations and anti-worker reforms for Member States.

“We need fundamental reform of the euro towards flexibility mechanisms or other possibilities, in the first instance. Some of the proposed solutions outlined in Joeseph Stiglitz’s book on the future of the euro are definitely worthy of consideration by policy-makers.

"The proposals made this week are just more of the same failed austerity policies, with some superficial tinkering around the edges.

"The Commission finally recognises that people across Europe are angry at the status quo, but it fails to pose solutions that could actually succeed in addressing the problems – which have developed from an economic crisis into a political one. 

“Transferring yet more power from locally accountable parliaments to bureaucrats in Brussels is obviously not the answer.”

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