Polish Minister of Finance warns of such scenario
Crisis of the euro-zone is the talker today. Careless attitude towards the balance of economic indices brought Greece, Spain and Portugal to the verge of bankruptcy. Their membership in the euro-zone has made the situation dangerous for the entire European Union. The EU donor-states, Germany and France, are willing to accept the burden of aiding their troubled brothers-in-arms, albeit setting forth their own conditions. Is the currency union between such economically various states possible at all and will Europe manage saving the euro and the European Union itself?
Polish Minister of Finance Jacek Rostowski, well-known European economist, was born in Great Britain. His father served as a personal Secretary to Tomasz Arciszewski — Prime Minister of the Polish government in exile. He was an aide to the author of the Polish “shock therapy”, Leszek Balcerowicz and since 1992 to 1995 had the same status within the government of the Russian Federation. Recently Jacek Rostowski has given an interview to the business-appendix of Gazeta Wyborcza. That’s what the Minister and a renowned macroeconomics specialist said:
“European elites have to decide, whether they want to save euro (even at the high cost) or not. If the answer’s no, they have to make the profound preparations for the controlled elimination of euro-zone. Those, who do not understand that, play with fire”.
Rostowski believes that Europe is standing at the threshold of a new crisis and the situation is even more dangerous than in 2008. According to him, everything depends on people, responsible for the global economic policy and whether they mistaken or not. He considers the national egoism to be an obstacle on the way out of the crisis. So, Finland, for example has demanded the cash pledge as a condition of helping Greece. From the other hand, the “southern populism” as Rostowski dubs it, makes an evidence of the economic irrationality, refusing to assume the responsibility for one’s own problems. That’s how Polish Minister views the European problems: southern populism of irresponsibility versus the northern populism of egoism.
Having taken advantage of its half-a-year-long chairmanship in the EU, Poland prepares its own plan for leading the EU out of crisis — according to the concept of its architect, Jacek Rostowski, it should simultaneously secure it from the future crises. Frankly speaking, with all due respect to the outstanding Polish financier, this plan is neither that impressive, nor original. Changing the financial security estimate in conformity with both the deficit of the public finance sector and the level of national debt — along with the legally defined mechanisms, restraining the sheer size of the national debt — can hardly be called a fiscal policy revolution. Polish suggestion to make the EFSF policy more flexible produces the same impression.
Considerations of the Polish Minister of Finance have something worthy and quite useful for the Russian economy, though. Unlike the majority of Russian economists and bureaucrats, Rostowski doesn’t consider the inflation a taboo. He understands that the increase of inflation also increases the taxed base and helps to fill the treasury. Jacek Rostowski is undoubtedly right in his estimate of the integration degree of the EU economies. This matter, however, is worth a detailed examination. Unification of 17 countries — from a tiny Cyprus with the population of less than 1 million people and making its living for the account of tourism and off-shore banking to Germany with its 82 million population and one of the most developed industries in the world — into a single currency union inevitably makes any economically-educated person question it. Luxemburg with its less than half-a-million population and 60-million-strong France are the neighbors within the euro-zone. It is unclear how can tourism-oriented Malta coexist within the same currency-emitting center with the export-oriented Germany economy, based on the technologically-demanding industrial production. Often used political term “Multi-speed Europe” would have had much more sense it, while applied to the economic aspect. It seems that the leaders of the major European countries — Angela Merkel and Nicolas Sarkozy — have finally started to understand that. They’ve recently stated that only the greater internal economic integration may save the euro-zone. Now we only have to figure out how to integrate what can’t be integrated.
What conclusions is Russia to draw from the situation that emerged in Europe? Crisis in two currency centers — the USA and the EU — has to make our own Ministry of Finance ponder over the situation. Both reserve currencies have become unreliable means of accumulating the currency reserves. Should we lift up our eye to the East and the yuan instead? Perhaps, it’s also past time we give a serious consideration to the creation of our own sovereign fund by the pattern of Chinese CIC. It seems to be the time to create an independent financial center in Moscow, which both President and Prime Minister have repeatedly talked about. This path, however, may only go through creation of the bourse, trading in our resources — oil, gas and metals — for rubles. Long story short, it’s past time we acted. Time of the conversations is gone.
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