At last Monday’s meeting of the Economy and Fin-ance Ministers of the eurozone, there was the discussion and an agreement on the next actions to be taken to bail out Greece.
According to the terms of the agreement, the tri-partite commission (made up of the EU, the ECB and the IMF) will be permanently based in Athens.
Profits made from Greek bonds by the ECB will be given to the national central banks to lend to Greece and there will be a haircut on debt held by private banks in exchange for bonds.
Meanwhile, eurozone members will reduce the rate of interest on loans given to Greece since 2010.
This agreement was given a great deal of prominence in the local media.
However, on that same day, 12 EU members, led by Italy, the United Kingdom and the Netherlands sent a letter to the EU President, Herman Van Rompuy, and the head of the European Commission, José Manuel Barroso, in view of the EU summit due to be held next week.
In this letter they exhorted the European Commission and the other member states to take cognisance of the fact that unemployment is reaching critical levels and to launch reforms that would ensure strong and sustainable growth.
The 12 states that signed this letter are Italy, the United Kingdom, the Netherlands, Sweden, Poland, Estonia, Latvia, Finland, the Czech Republic, Slovakia, Ireland and Spain.
In this letter they highlight eight points that have one common feature – freeing up the internal market and removing rigidities that are judged to be hindering economic growth.
The underlying strategy is that, although fiscal consolidation is necessary, economic stability can only be achieved if such consolidation is coupled with policies that achieve growth.
Thus the eight points mentioned in this letter (that does not seem to have received any attention locally) are not meant to increase public expenditure but rather refer to reforms that are expected to continue modernising the EU economies and improve business competitiveness.
The eight reforms that are being asked for are:
• Liberalising the market for services (there is currently at partial liberalisation);
• Creating a single market for energy by 2014;
• Creating a single digital market by 2015;
• Strengthening research and innovation;
• Reducing the burden of legislation on small- and medium-sized enterprises;
• Increasing the participation of females and youth in the labour market by having more flexibility;
• Reducing the number of professions that are regulated nationally by a warrant;
• The creation of a robust and dynamic financial services sector.
There is also some detail in the letter that provides further food for thought.
For example, these 12 member states are proposing that there should be a reduction in the guarantees given to commercial banks and that such banks should be made responsible for the risks they take on.
It is also being proposed that the European Commission be given the role to control and monitor the implementation of these reforms. It needs to be said that some of these reforms have already been proposed in the past but have been refused.
On the other hand, the formation of such a group of 12 countries within the 27 member union, is an indication that Germany and France can no longer continue to call all the shots.
I believe that the proposed reforms make sense within the evolving international scenario. As Fareed Zakaria noted in his book, The Post American World, we are steadily moving from a world with one superpower (previously we had two superpowers) to a world with one superpower with many powers.
These powers would include China, India, Russia, Brazil and others. If the EU is aspiring to be such a power, then it can no longer afford to delay any further the completion of the process of having a single internal market.
Maybe the concluding remarks of the letter sent by these 12 states is indicative of the needed renewed vigour with which the European Union must approach future challenges.
These countries are claiming that a high level of confidence must be re-established among the people, businesses and financial markets, in the capability of the EU economy to grow and to maintain its share of global prosperity.