EKIP– Expert Club for Economics and Politics A Different Opinion
The native MEPs were beating their chests that they had successfully fought for new EU legislation in the field of consumer goods, through which they would prevent the so-called "double standard" of food between the eastern and western parts of the continent. Whether this is fake news or just political posturing remains a topic of open debate.
At the same time, a press release from the Croatian central bank confirmed something that had been whispered about since at least the summer of 2018 - that the eurozone government was treating Bulgaria according to standards significantly different from those applied when dealing with all other EU countries. Standards that the deputy governor of the Czech National Bank, Mojmir Hampl, called "humiliating ". Let us recall his words:
"Negotiations for Bulgaria's accession to the single currency area ended with the country's 'voluntary' agreement, at least on paper, to a humiliating list of conditions that will oblige it, along with other countries that will adopt the euro in the future, to shoulder a large share of the costs of the eurozone before it knows when or even if it will be admitted to the bloc. No government with even a modicum of dignity could accept these conditions."
The Czech central banker is referring to the letter from Finance Minister Vladislav Goranov and Bulgarian National Bank Governor Dimitar Radev dated June 29, 2018, in which Bulgaria officially signaled its desire for “close cooperation” with the European Central Bank (ECB) – or, in other words, its intention, if allowed, to embark on the path to ERM II. With it, unlike in the entire history of the eurozone, the candidate country sets special additional requirements for itself, without this being part of the official rules. The word “voluntarily” in quotation marks refers to the unofficial information that our government was pressured by its eurozone partners to request these additional conditions.
To neutralize the problem, on July 12, 2018, the Eurogroup (the finance ministers of the eurozone countries) concluded its statement on the Bulgarian letter with the following sentence: “In the future, we expect to follow the same approach for member states that want to join ERM II, in accordance with the principle of equal treatment.” In other words, each subsequent candidate country for ERM II and the eurozone will go through an extended procedure with additional conditions, just like Bulgaria.
Here we come to the information from May 27, 2019, uploaded to the website of the Croatian National Bank, where from the official press release we understand that the newest member of the European Union has officially declared its desire for close cooperation with the ECB. What is missing from the text – any additional conditions, be they humiliating or not. Contrary to what was stated by the Eurogroup, for the other member states wishing to join the eurozone, there is no (successful) pressure and, accordingly, new criteria.
Although it is hidden from the public eye, the eurozone has a long history of circumventing, changing and not respecting its own rules. Even at the time of the creation of the monetary union, many potential member states were far from fulfilling the all-important Maastricht criteria (or convergence criteria), which in theory guarantee the stability of the entire eurozone and are a mandatory (at least in theory) condition for entry into the eurozone. In order to be able to associate with a common currency, European leaders have gone through a significant amount of creating and enforcing double standards.
For example, in 1997, France could not meet the 3.0% budget deficit criterion and therefore could not adopt the euro - to solve the problem, the state-owned France Telecom made a payment to the treasury, which reduced the deficit for a year, while in return the state assumed the obligation to pay the company's pension promises in advance. The case of another country, which like us is experiencing difficulties with corruption - Italy - is similar to the French one.
Since the Maastricht criteria postulate a ceiling on public debt of 60% of GDP, many countries cannot meet this requirement, which necessitates a "softening" of the standards - after the intervention of the then German Chancellor Helmut Kohl, for the Apennine country it is enough just to show a reduction in its debt (then at 120% of GDP). And it is in. Today, Italy's debt is 130% of GDP, the reduction "surprisingly" has not yet happened.
The crown jewel of the eurozone's double standards is our southern neighbor, Greece, which, according to a 2004 statistical audit, submitted falsified data to Eurostat, thus managing to meet deficit requirements. When it joined in 2000-2001, its debt was 90% of GDP; today it is 180% - three times the entry criterion, which has never been met. The Greeks actually had no reason to worry about such trifles as rules; during the accession negotiations, Dutch Finance Minister Gerrit Zalm assured them that the criteria "can be interpreted, under certain circumstances" (The story is told in detail by former IMF Deputy Director for European Affairs Ashoka Mody in his book Ashoka, Mody (2018). EuroTragedy: A Drama in Nine Acts, ed. ).
In this context, it is useful to recall the words of our Finance Minister and the Governor of the BNB in that same unfortunate letter of June 29, 2018, where they say that: “over the past 20 years, Bulgaria has had fiscal stability and sustainability with public deficits and debt levels significantly below the Maastricht criteria6 for almost 90% of the period. Budget surpluses have been recorded for almost half of the period and our public debt (below 25% of GDP) is the third lowest in the EU.”
It is also good to ask ourselves why we have so unanimously, without debate, without even a serious public conversation, decided to throw away the stability provided to us by the most successful economic reform in Bulgaria – the currency board – to replace it with the eurozone of double standards, in which those who meet the criteria are humiliated, and for others who meet the criteria only through manipulation, special interpretations are made. And this entire process is placed in complete darkness both in our country and at the European level – far from the eyes of the so-called sovereign – the Bulgarian citizen.
The article was originally published by Investor.bg
