Earlier this week, Spain and Portugal were fined a grand total of $0 for breaking the euro’s budget rules. The Wall Street Journal reports:
The European Commission on Wednesday recommended not imposing fines on Spain and Portugal for missing budget-deficit targets last year, underscoring the lack of appetite across the bloc to come down harshly on members that break fiscal rules at a time of economy instability in the region.Eurozone governments can contest the commission’s recommendation within 10 days. If they do nothing, the zero fine will apply.The recommendation, while positive for Spain and Portugal, is likely to draw criticism toward the European Commission, which could be seen as too lenient toward fiscal rules created in 2013 as a response to a sovereign-debt crisis that put the future of the eurozone in doubt.To address that criticism, the commission signaled it would keep pressure on both countries. If they don’t fulfill budget recommendations, part of the 2017 structural funds from the European Union to both could be frozen, the commission said.
Yes, next year we will get more serious. Southern Europe’s leaders must be just quaking in their boots, thinking of how bad that will be.Not that these are easy problems to solve. As we wrote earlier this month:
Rather, what this flags up is that, nearly a decade after the euro crisis started, Europe still hasn’t figured out how to make the euro work as a cohesive currency. Despite the happy talk about how the Germans are more tolerant of European Central Bank measures these days, it’s still run more or less as if it were the Deutschmark, but distributed to nations that need the lira. Fiscal transfers are still a distant dream, and as this story shows, so is fiscal discipline. And so, unable to go forward but unable to back out, the eurozone will limp on until the next crisis.
Consider today another limping step onward. But who else will notice that breaking the rules carries no consequences?