German Press: Relaxation of the Stability Pact is proposed by the Commission

“The 90s are the new 60s” reads an article in the online edition of the economic magazine Handelsblatt regarding the Commission’s proposals for a partial revision of the Maastricht criteria. According to them, the Stability Pact still limits public debt to 60% of GDP, but for member states that already have high debt, a more relaxed “intermediate target” of 90% of GDP is set. The comment of the German newspaper: “The Commission capitulates in front of the sad reality. After the corona virus epidemic, the public debt reaches 186% in Greece and 148% in Italy. Portugal, Spain, France, Belgium and Cyprus also belong to the circle of ‘high risk countries’, with the government debt exceeding the 90% limit”.

But would it make sense to strictly apply the rules of fiscal discipline? As Handelsblatt observes, “to insist under these circumstances that the debt be reduced to 60% within 20 years, as the rules have been until now, would not only be unrealistic. It would also be economically inefficient, as a policy of excessive cuts would lead directly to recession. One can only welcome the fact that states have more time and more flexibility to reduce their debt.”

Solz and Europe

“Agreement-lite” on the natural gas cap is seen by many German media after the Brussels summit, with the details yet to be clarified. However, the negotiating tactics of Chancellor Olaf Solz are being commented on with a critical attitude. Süddeutsche Zeitung notes: “In Berlin, in the chancellery to be precise, it seems that no one understands (or wants to understand) how much damage Olaf Solz’s solitary decisions, which sometimes seem to be dictated by stubbornness, are causing to the rest of Europe. Europe is going through the biggest crisis since the end of World War II. Crisis management means, to a large extent, communication. People need to know what you are doing about the crisis, other governments need to know how and why you are doing it. Olaf Scholz’s communication at the European level is limited to one sentence, which shows ignorance at best and arrogance at worst: Germany is doing everything right.”

“EU member states agree on gas price cap – despite German resistance” is the front page headline of the Frankfurter Allgemeine Zeitung (FAZ). In its commentary entitled “The art of the possible” the newspaper observes: “At the current juncture, obviously nothing better could emerge from the summit than an apparent compromise, which all participants consider successful, in the sense that important decisions are postponed ». The Karlsruhe newspaper Badische Neueste Nachrichten warns: “One of the reasons that led the Russian president to the decision to invade Ukraine is that he sees the EU as a hodgepodge of self-centered, soft and decadent (politicians). At first it looked like she was wrong, because the EU reacted with a team spirit and determination that surprised her in the first place. But the longer the war drags on, the closer winter gets and the more expensive life becomes in the midst of crisis, the more cracks in the EU’s cohesion grow.”

“The Brexit bill has not yet been paid”

In one of its characteristic, imaginative covers, the magazine DER SPIEGEL presents Great Britain as a …banana, even giving the shape of a banana to Big Ben, the symbol of London. Speaking to the German magazine, the British economist and professor at Columbia University in New York, Adam Tooze, gives his own interpretation of what is happening. Asked what the outgoing Prime Minister Liz Truss did wrong, he says: “She tried to repeat the Brexit bluff at a higher level. For a long time the economic consequences of leaving the EU were overshadowed by loose monetary policy. We would say that the Brexit bill has not yet been paid to date. To some Tories this has created the false impression that the fear of market discipline is overblown and that somehow everything is allowed. Representatives of this generation of Tories are Truss and her trusted partner Kwasi Kwarteng. They dreamed of a Global Britain and wanted to return to Thatcherism.”

What can be the solution to the current impasse? According to the British professor, “the cost of Brexit is becoming more and more visible, most people now consider it a mistake. But also on the issue of immigration, moods have changed, because the British realize that without foreign workers, the economy cannot function, nor can the health system. A Labor government could try to make the best of this bad situation, for example by striking a new trade deal with the EU.”

DW – Giannis Papadimitriou

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