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The Euro's Eternal Crisis
EU: Rules? Fuggedaboutit

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?

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  • Fat_Man

    Explain to me again why the British were foolish to want out.

    • Josephbleau

      Because Obama the Munificent ordered them not to.

    • Observe&Report

      I hear that the EU grandees are telling Britain it must accept freedom of movement if it wants continued access to the single market, a complete non-starter given how the issue of immigration partly dominated the Brexit debate.

      Somehow, I think the British will be getting their way.

  • Pete

    The EU is a pathetic joke. It really has no strict rule of law that its ruling class has to abide by. .

    The Europeans accept that. Maybe things would be different if there was a 2nd Amendment in Europe but as it is, the people there have been emasculated by the elite. Pity.

  • PierrePendre

    It would have been discriminatory to fine Spain and Portugal when France is an unpunished sinner – because it’s France according to Jean-Claude Juncker! – and Germany has been in the past. With anti-EU feeling rising, spurred by the success of Brexit and the disasters with the euro and Schengen, this is no time to exasperate struggling EZ countries with the burden of fines. The EU has a history of pragmatically breaking it’s own laws and probably has no choice given that it’s a club of 28 very different countries. Stalin said that imposing communism on Poland was like trying to saddle a cow. Imposing the EU’s one size fits all policies on 28 countries is like trying to saddle a rodeo bull.

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