Euro Zone En­large­ment Call Sparks Back­lash in Ger­many

Iran News - - WORLD NEWS -

TALLINN (Reuters) - Af­ter years of bail­ing out Greece, the idea of let­ting more poorer states into the euro zone has sparked con­tro­versy, par­tic­u­larly in Ger­many, where Chan­cel­lor An­gela Merkel is seek­ing re-election in two weeks time.

The back­lash came af­ter Euro­pean Com­mis­sion Pres­i­dent Jean-Claude Juncker called on Wed­nes­day for non-euro zone coun­tries to quickly adopt the sin­gle cur­rency so that the Euro­pean Union can find new unity in the euro af­ter Bri­tain leaves in 2019.

Juncker promised to pro­pose tech­ni­cal and fi­nan­cial help for the will­ing, quickly trig­ger­ing con­cern from in­flu­en­tial Ger­man mem­bers of the Euro­pean Par­lia­ment, like the deputy chair­man of the eco­nomic com­mit­tee Markus Fer­ber.

Juncker’s call was in­ter­preted by some in Ger­many as mean­ing the Com­mis­sion would be le­nient in as­sess­ing the readi­ness for the sin­gle cur­rency of the mostly for­mer com­mu­nist and poorer east­ern Euro­pean coun­tries like Bul­garia or Ro­ma­nia.

Greece, which adopted the euro in 2001, later turned out not to have been ready be­cause of fal­si­fied deficit statis­tics. The coun­try trig­gered a mas­sive debt cri­sis in the euro zone and had to be bailed out three times by other euro zone govern­ments.

“Euro for all EU coun­tries? There are clear cri­te­ria and rules for join­ing. Greece can not re­peat it­self,” Fer­ber tweeted af­ter the Juncker speech.

EU of­fi­cials be­came con­cerned that the mis­read­ing of the Juncker speech in Ger­many could fuel sup­port for pop­ulist and Euroscep­tic par­ties and Juncker aides took to Twit­ter on Fri­day to try and counter that ef­fect.

They stressed that coun­tries would only be al­lowed into the sin­gle cur­rency if they met eco­nomic and gov­er­nance cri­te­ria.

In Ger­man lan­guage-only tweets they also pointed out that some, like keen would-be mem­ber Bul­garia, al­ready meet many, though not all, of the eco­nomic stan­dards for en­try.To adopt the euro, a Euro­pean Union coun­try has to have low in­fla­tion, in­ter­est rates and debt, a deficit within the EU lim­its, as well as a sta­ble ex­change rate, proven by two years spent in the Ex­change Rate Mech­a­nism II with­out se­vere ten­sions.

“The ex­change rate of the Bul­gar­ian Lev is ab­so­lutely sta­ble to the euro since 2006,” Juncker’s head of cabi­net Martin Sel­mayr tweeted. “The In­fla­tion rate of Bul­garia is just at 0.2 pct and much lower than in the euro area.”

Ad­dress­ing Ger­man sen­si­tiv­ity to debt, he tweeted: “Ger­man debt is al­most 66 pct of GDP, more than twice as high as the Bul­gar­ian one.”

Ro­ma­nia and Bul­garia meet all the nom­i­nal cri­te­ria to join the euro ex­cept the twoyear ex­change rate sta­bil­ity test in the ERM II and the com­pat­i­bil­ity of their cen­tral bank laws with euro zone re­quire­ments.

They are also far from meet­ing the “soft” cri­te­rion of real eco­nomic con­ver­gence with euro zone economies -- a fac­tor that could pre­vent them get­ting the go-ahead for adopt­ing the euro. Coun­tries out­side the euro zone in­clude Bul­garia, Croa­tia, Czech Repub­lic, Hun­gary, Poland, Ro­ma­nia, Swe­den, Den­mark and Bri­tain, but the last two have a for­mal opt-out from join­ing.

Oth­ers have a le­gal obli­ga­tion to adopt the euro when they meet all the cri­te­ria, but there are no dead­lines for that.

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