By Re-Define Managing Director Sony Kapoor and Fabrizio Tassinari at the Danish Institute for international studies. Note: this has appeared as an op-ed in the European Voice
Ways that the EU could unleash the animal spirits of the markets to trigger self-financing green investments.
Can green growth shake Europe out of its economic stagnation? At face value, Denmark is not the most obvious candidate to answer this question. The UN climate summit that Copenhagen hosted in 2009 was supposed to herald a new era of international responsibility; instead, it has become a byword for discord between a declining West and emerging economies.
Sony Kapoor, Director of Re-Define & Peter Bofinger, Member of the German Council of Economic Experts
Dated the 30th of January 2012
THE CONTRACTING PARTIES………….
CONSCIOUS of the need to tackle the unprecedented social, political, economic, employment and institutional challenges confronting the Union, and
RECOGNIZING that promoting growth is the best possible way of rising up to these challenges, thus
DESIRING to kick-start growth in short-term and construct structures and implement policies that put the Union on a path of higher growth in the long-term, especially as only growth will create the economic and political space to enact the serious structural reforms the Union needs, and
This appeared as an opinion piece in the Danish newspaper Börsen on 13/1/2012
The EU’s response to the most serious crisis of our lifetimes is failing. The austerity-only path we have embarked upon is a road to recession with deeper unemployment, welfare losses and increasing social frictions.
When excessive levels of Greek debt were first revealed at the end of 2009, it was shocking how quickly the narrative of the crisis changed from one of a financial crisis to that of a fiscal crisis. This change was driven by politics and ideology where leaders in some countries found it easier to blame ‘lazy Greeks’ for the crisis rather than address endemic problems in their banking system. The weakness of the financial sector was pushed out of sight and Europe is now paying the price. Despite enjoying unprecedented public support, the EU banking system remains broken and is failing in its job of supporting the real economy.
Note: This is the first part of my Essay \'For Europe, High Stakes in Greece\' that has just been published by the American Prospect this week. The recent decision on the Greek referendum adds a special relevance to this article.
The problems of the Euro turned critical when the Greek government nearly defaulted in May 2010 and the International Monetary Fund and European Union agreed to a bailout. In truth, the 17-nation Euro area had deep troubles long before that. Its oversized and undercapitalized banks, its common monetary policy but diverse and fragmented fiscal policies, the persistent economic imbalances among its members, and a cumbersome decision-making structure all made the Euro area economy vulnerable. The crisis, which still unmistakably bears the mark of the Greek tragedy that first set it off, has now spread far beyond Greece.
The Euro was created for normal times, but the EU had no good mechanisms for crisis management. At every step of the Greek drama, policymaker responses have remained behind the curve of economic deterioration. Slowly but surely, this erosion of confidence ensnared other countries, such as Ireland and Portugal, then spread to Spain and Italy, both widely perceived to be fiscally vulnerable. If European leaders cannot resolve Greece’s problems, they can hardly save the much larger economies of Spain and Italy.