IX th INTERNATIONAL DAYS OF STUDY JEAN MONNET
CALL FOR PAPERS
The Jean Monnet Chair in Comparative Regional Integration and Larefi (University Montesquieu-Bordeaux IV) are organizing in partnership with the University of Sofia, on Friday 28 and Saturday 29, October, 2011, during the Ninth International Days of Studies Jean Monnet an international Conference on the following topic:
The euro area under the double strain of globalization and domestic economic divergence: analysis and remedies
European Union that will exist tomorrow is still a building site under construction. The facts require us to achieve quickly a decisive deepening of European monetary integration in an international context of relative decline of the U.S. economy and of the emergence of production to Asia. While European economies, including those of the euro area, appeared to have better result with the financial crisis coming from the United States than the rest of the world, because of the strength of their currency, the euro, financial markets have exercised their capacity to punish their budgetary deteriorated positions. The quasi-forced conversion of private debts of households and firm into European public debts of states, induced by the aid
credibility of the solvency of European states. The owners of global capital are now free to set interest rates of loans of European states. The Greece, first nation dramatically affected in the euro area, is threatened in its internal cohesion. Thus, the current crisis calls for new regulations, a change not only in the institutional structure of Europe towards a configuration necessarily more federal (otherwise, Europe will defeat), but also a consolidation of economic and social paradigms that have constituted the very foundation of its construction both commercial and political. The Conference will be held under the following four workshops:
Workshop 1. The absorption of European twin deficits (fiscal deficits and current account balances).
Faced with large public deficits but also for the majority of countries in the euro area to the twin deficits (fiscal and current account), European countries will have to act so that the state of their economy avoids an increase in interest rates on their sovereign debt. While the austerity plans of the States of the euro area (Greece, Portugal, Spain, Italy) show an intention to reduce public expenditure, notably through a reduction in salaries of civil servants but also of operating expenditure, financial markets are questioning the feasibility of such commitments because of the narrow time frame to States accorded by the International Monetary Fund and the European Commission. Concerns arise, established on the consequences of a general reduction in overall demand in the euro area which would reduce economic growth. Such a risk calls to apply gradually the austerity plans over time. A contrario, an optimized policy mix of the euro area combining a tight fiscal policy, a single monetary policy of low interest rate and with weak inflation is also proposed. The progressive competitive depreciation of the euro with the dollar could help loosen resulting macroeconomic constraints. In this context, must we strengthen budgetary surveillance criteria, expand the monitoring of current account European balances, other economic indicators such as debt ratios Private or conversely, define constraints less strong? What are, under the fiscal policy of European states, the possibilities of issuing Treasury bonds with a real federal government while the French and German governments reject any supranational structure of governance? Would be sufficient this governance to restore confidence in the euro area? What power would have such a structure for raising EU funding for public deficits of member states, for example to mobilize the savings of EU citizens rather than that of European banks, creditors themselves of foreign financial institutions? Is this to an European Central Bank reformed , that is to say more concerned by growth and jobs, that would be
granted the responsibility of guaranteeing the debts of States (the EU treaties thus being forced to evolve).
However, the review of public deficits can not seem to be dissociated from that of current account deficits, which have become almost structural deficits and which are more difficult to eliminate because they reveal an inadequacy of some economies to globalization.
The issue of public deficits therefore calls simultaneously and probably for a longer period, the recovery of the commercial situation of European economies. The divergence within the euro zone between, on one hand, the countries with trade surplus and, on the other, those with deficits cannot be absorbed, beyond any budget transfers, without a redefinition of their specialization international trade.
Workshop 2. Which axes for a new European specialization. ?
In the long term, the terms of a renewed external trade competitiveness are to be established. A competitiveness problem-structure is openly posed to Greece, Spain, Portugal, France, etc.., That is to say to all the countries of the euro area also characterized by a recurring negative balance of current account (their ability to finance their public goods is henceforth diminished).
The EU must ensure not only sustainable construction of its non-price competitiveness through technological innovation and an industrial clusters politics but also the construction of its price competitiveness in the short term which may lie in a commercial renovated politics. We can examine, for example, the privileged role of productive clusters, the need for a more ambitious industrial policy, the desirability of creating a European investment fund in the formation of a genuine structural competitiveness of European products, etc. The immediate attention must be ways to reduce wage differences in order to rebalance the European price competitiveness within Europe. While 70% of trade of European nations is established with other European countries, as pointed out recently, Pierre Bourdieu, the main danger for Europe is constituted by the internal competition with European countries with low wages, that which ultimately would force other European countries to abandon their social benefits and then would push down the social Europe. What are the political and institutional means to realize a social exit "from above" and therefore, a strengthened economic and social convergence? Should we rely solely on the Lisbon strategy or should we develop new tools to improve the competitiveness structure of European countries (highly skilled workforce and
More basically, on a European scale, is not this step on the principles of the competition which would have to be questioned? Confronted with realities of commercial and financial globalization, Europe can be perhaps preferred a regional trade cooperation founded on the complementarity of the European productions rather than on social and fiscal dumping.
Moreover, can it make the choice of a more constraining regulation towards the delocalizations or that of a widened regional cooperation, likely to inflect the rules of WTO?
Can it, because of its economic weight, to negotiate directly with the large Asian partners of the first zone of world production (China and India)?
Workshop 3. To new European regulations to prevent financial crises and reduce public deficits in Europe?
The joint need to curb speculation that takes for target the public finances but also to restore a distribution of income more equitable and favourable to economic growth led European governments to reform their financial regulations. While Merkel has made vote the ban of speculative operations of CDS on sovereign public bonds and on the shares until 2011, that B. Obama seeks to ban speculative trading on own account in U.S. banks, one may question the need for standardization of such restrictions at European level and on the effect of limiting the external mobility of capital in Europe. While some European countries have decided to tax more heavily the dividends of corporations and bank profits to promote the distribution of value added for productive investments, Germany advocate the introduction of a tax on transactions financial at G20. But such proposals are not always well accepted. In Europe, a bank tax could either feed a bank insurance fund in case of another crisis (scenario favoured by Germany), or could feed directly the state budget (scenario described by France).
But such proposals are not always well accepted. In Europe, a tax credit could either feed a bank insurance fund in case of another crisis (scenario favoured by Germany), or fed directly to the state budget (scenario described by France).
Simultaneously, a financial transactions tax would discourage speculation and would fund operations investment programs and social and environmental emergency in Europe. The International Monetary Fund seems to prefer to create an insurance fund against bank failures, funded by contributions from various international banks. The question then is whether such regulations are likely to be applied at the European level or that of the euro area but also, if they have positive effects and under what conditions. However, the objectives of such a tax are clear: to ensure that financial markets (banks and large international insurance companies,
pension funds, hedge funds, etc..) reimburse at least part of their bailout by States after the subprime financial crisis. The introduction of such taxes across Europe would have a redistributive effect by increasing the apparent weight of a portion of the tax on the financial sector, easing the burden on wages (and hence consumption) and that affect business.
However, it is questionable on both the effectiveness of such a tax but also the risk of passing on the rising cost of bank transactions and hence the cost of financing investment projects of SMEs in Europe. Moreover, the risks of tax evasion by manipulation or use of tax havens could rise. These opposite arguments have also been raised by the IMF.
Workshop 4. Structural arrangements for entering the euro area: new constraints to the candidate countries?
While Estonia should join the euro zone on 1 January 2011, the accession of Lithuania and Latvia has been postponed to a later date because of high inflation, and that of Bulgaria, the Czech Republic, Hungary, Poland and Romania has been postponed to 2013- 2016. Bulgaria, Estonia and Lithuania have a specific monetary system board in fixed exchange rate against the euro, which is supposed to enable them to achieve the objectives of fiscal discipline and inflation contained. Faced with the fiscal performance of Estonia, the imperfect implementation of the currency board regime and its difficult social acceptability appear to have resulted in poor performance in Bulgaria and Lithuania. It is also possible that more structural reasons (production specialization, sectoral specific shocks) have led the European Commission to postpone their entry into the euro area. But the future enlargement of the euro area to a dozen additional countries now seems directly related to the relevance of the convergence criteria of Maastricht. How to determine if the candidate countries are meeting the entry criteria in the euro area, whereas these criteria are questionable or inadequate? It is clear that the criteria for entry into the euro area should take into account the real convergence of economies candidates, that is to say, both the differences in trade balances, production structures and income, including wage. A review of criteria for entry into the euro area raises the question of new diagnostic elements and their relevance.
The future entry of Central European countries with price levels and wages lower relative to those of current members of the euro area may eventually lead to an additional inflation in the euro area (rising wages and prices due their nominal convergence).
Achieving nominal interest rates lower in the euro area, together with a supplement of inflation, may create a situation of real interest rates low, source of excessive debt and
formation of such bubbles may increase the exposure of the euro area to crises, hence the need to lay down more stringent conditions of entry for these countries in the euro area. It should also consider adopting a more balanced policy mix with the advent of a federal governance without which the euro area can not be perpetuated. So many questions we must answer so that the enlargement of the euro area is a vector of credibility and further economic growth and not an increased risk of occurrence of speculative attacks devastating for income and employment the euro area and EU.
The proposed contribution of about two hundred words are addressed to:
University Montesquieu-Bordeaux IV Avenue Léon Duguit - 33608 - PESSAC
E-mail: chaire@u-bordeaux4.fr E-mail: Dominique.jacob@u- bordeaux4.fr Phone: + (33) -05-56-84-86-22
before January 9, 2011
Authors will be notified January 23, 2011, on the decision with their proposal after consideration by the Scientific Committee of the IXth International Days of Study Jean Monnet. The final texts of contribution (15-20 pages) should reach the Secretariat of the Jean Monnet Chair "Comparative Regional Integration" and D. Jacob, Larefi, later than September 15, 2011. The program of study days will be sent in the month of April 2011 to the various speakers and participants.
Scientific Committee (in progress):
B. Blancheton, University Montesquieu-Bordeaux IV ; M. Cazals, University Montesquieu- Bordeaux IV ; N. Dobrev, University of Sofia ; G. Chobanov, University of Sofia ; I.
Christova-Balkansaka, Institute of Economics, Bulgarian Academy of Sciences ; D. Jacob, University Montesquieu-Bordeaux IV ; K. Petkov, University of Sofia ; T. Sedlarski, University of Sofia ; A. Vassilev, University of Sofia ; B. Yvars, University Montesquieu- Bordeaux IV.
