Juncker's State of the Union, or How Not to Move Europe Forward

Commenting on Jean-Claude Juncker’s state of the European Union speech last week, the usually restrained German economic weekly Wirtschafts Woche said the following: “Today the chief of the European Commission gave a great speech… a speech full of great nonsense.” What prompted that staid publication to use such undiplomatic language, especially since the European Parliament gave the speech a standing ovation? Hopefully, it is the realization of more and more Europeans that the cheap EU triumphalism and prescriptions peddled by Juncker are, at best, inappropriate, and at worst, a recipe for disaster.

Of triumphalism there was plenty in the speech. “The wind is back in Europe’s sails” Juncker assured the audience and told it that the EU is “in the fifth year of an economic recovery,” something that few reputable economists believe. As proof, the European Commission offers GDP growth of 0.6% in the second quarter, on top of 0.5% in the first. Impressive, compared to 1.2% average for the past five years and 0.37% growth in 1995-2017, but far behind U.S. growth of 3% in the second quarter of 2017. The actual economic situation is far worse, especially for the countries of the southern tier. Italy, the largest of them, now has a GDP lower than when the euro was introduced in 1999. Youth unemployment is and has been for years nothing short of scandalous, with 44.45% in Greece, 38.6% in Spain, 35.5% in Italy and 23.45% even in France. And this with banks teetering at the precipice, zero interest rates, and the Central Bank buying tens of billions of private bonds with public money in brazen disregard of Article 123 of the EU charter. All the while keeping zombie banks artificially alive for a while longer and thus guaranteeing a longer-term stagnation a la Japan.

While his pollyannaish interpretations of reality are not unusual for a politician, his economic prescriptions are wrong and harmful. He wants to get all EU members into the euro zone at a time when it is abundantly clear that this is exactly the wrong approach. If any proof is needed, it’s enough to compare the sad state of Greece, a euro zone member, with that of Poland, the GDP growth champion of the EU, which is not. It is high time for EU mandarins to realize that with vastly divergent levels of economic development and governance quality in the EU, taking away the tried and true method of regaining competitiveness through currency devaluation has been a disaster. This is unlikely to happen under Juncker, though it is a hopeful sign that no EU government has endorsed his views to date.

There is much more in his recommendations that is nonsensical, as Wirtschafts Woche notes, but perhaps it is more interesting to focus on traditional EU priorities that are given very little attention in Juncker’s extensive speech. Two are especially noteworthy -- global warming and migration. On the former, Juncker is anything but loquacious. Following the “collapse of ambition in the U.S.,” he said, “Europe will ensure that we’ll make our planet great again.” No details, no flights of fancy, no poetic license. And it is easy to see why. It is now clear that Germany, the poster child of virtue on global warming, will fail to meet its solemn pledges on 

CO2 reduction in both 2020 and 2030. In fact, the only thing it can reliably promise is greater CO2 emissions from lignite usage.

In a similar vein, Juncker has little to say about the migrant crisis that threatens to overwhelm the EU and create a permanent fault line between Eastern and Western Europe, except the meaningless boast that those “fleeing from persecution can find refuge” in Europe. It is a very dishonest claim because, with the exception of Turks fleeing Erdogan’s Islamist lawlessness, the vast majority of migrants are fleeing poverty rather than persecution. If, as Juncker claims, 720,000 of them have been given asylum, the EU has thereby created a new right to better life that will sooner or later have disastrous consequences for the old continent.

As for Jean-Claude Juncker, he is in his last term as president of the European Commission and there isn’t a great clamor to have him back. But he is not without opportunities. Earlier this year, after Trump opined that others might follow Britain out of the EU, he threatened to lead a campaign to get Ohio and Texas to secede from the United States. It seems like a worthy goal for a man of his considerable talents.

Commenting on Jean-Claude Juncker’s state of the European Union speech last week, the usually restrained German economic weekly Wirtschafts Woche said the following: “Today the chief of the European Commission gave a great speech… a speech full of great nonsense.” What prompted that staid publication to use such undiplomatic language, especially since the European Parliament gave the speech a standing ovation? Hopefully, it is the realization of more and more Europeans that the cheap EU triumphalism and prescriptions peddled by Juncker are, at best, inappropriate, and at worst, a recipe for disaster.

Of triumphalism there was plenty in the speech. “The wind is back in Europe’s sails” Juncker assured the audience and told it that the EU is “in the fifth year of an economic recovery,” something that few reputable economists believe. As proof, the European Commission offers GDP growth of 0.6% in the second quarter, on top of 0.5% in the first. Impressive, compared to 1.2% average for the past five years and 0.37% growth in 1995-2017, but far behind U.S. growth of 3% in the second quarter of 2017. The actual economic situation is far worse, especially for the countries of the southern tier. Italy, the largest of them, now has a GDP lower than when the euro was introduced in 1999. Youth unemployment is and has been for years nothing short of scandalous, with 44.45% in Greece, 38.6% in Spain, 35.5% in Italy and 23.45% even in France. And this with banks teetering at the precipice, zero interest rates, and the Central Bank buying tens of billions of private bonds with public money in brazen disregard of Article 123 of the EU charter. All the while keeping zombie banks artificially alive for a while longer and thus guaranteeing a longer-term stagnation a la Japan.

While his pollyannaish interpretations of reality are not unusual for a politician, his economic prescriptions are wrong and harmful. He wants to get all EU members into the euro zone at a time when it is abundantly clear that this is exactly the wrong approach. If any proof is needed, it’s enough to compare the sad state of Greece, a euro zone member, with that of Poland, the GDP growth champion of the EU, which is not. It is high time for EU mandarins to realize that with vastly divergent levels of economic development and governance quality in the EU, taking away the tried and true method of regaining competitiveness through currency devaluation has been a disaster. This is unlikely to happen under Juncker, though it is a hopeful sign that no EU government has endorsed his views to date.

There is much more in his recommendations that is nonsensical, as Wirtschafts Woche notes, but perhaps it is more interesting to focus on traditional EU priorities that are given very little attention in Juncker’s extensive speech. Two are especially noteworthy -- global warming and migration. On the former, Juncker is anything but loquacious. Following the “collapse of ambition in the U.S.,” he said, “Europe will ensure that we’ll make our planet great again.” No details, no flights of fancy, no poetic license. And it is easy to see why. It is now clear that Germany, the poster child of virtue on global warming, will fail to meet its solemn pledges on 

CO2 reduction in both 2020 and 2030. In fact, the only thing it can reliably promise is greater CO2 emissions from lignite usage.

In a similar vein, Juncker has little to say about the migrant crisis that threatens to overwhelm the EU and create a permanent fault line between Eastern and Western Europe, except the meaningless boast that those “fleeing from persecution can find refuge” in Europe. It is a very dishonest claim because, with the exception of Turks fleeing Erdogan’s Islamist lawlessness, the vast majority of migrants are fleeing poverty rather than persecution. If, as Juncker claims, 720,000 of them have been given asylum, the EU has thereby created a new right to better life that will sooner or later have disastrous consequences for the old continent.

As for Jean-Claude Juncker, he is in his last term as president of the European Commission and there isn’t a great clamor to have him back. But he is not without opportunities. Earlier this year, after Trump opined that others might follow Britain out of the EU, he threatened to lead a campaign to get Ohio and Texas to secede from the United States. It seems like a worthy goal for a man of his considerable talents.

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