Tuesday, October 21, 2008

"Economic Government"

President Sarkozy has called for an "economic government" for the Eurozone. "If the European Central Bank must be independent," he says, then "it must be able to enter into discussions with an economic government." Like so many of Sarkozy's proposals, the grand and the vague are present in equal doses, and it is easy to suspect ulterior motives. To be sure, some continuity and greater coordination than exists at present might be useful features of economic policymaking in Europe, and Sarkozy's belief in the need for a counterweight to to the ECB is well known. Enlargement has made the coordination issue acute, and the leaders of large economies, especially the old French-German tandem, might well wish for a central economic institution in which influence would be apportioned by GDP rather than population or nationality. The current crisis has highlighted the need for rapid response, just as in the foreign policy realm. It will be interesting to see if Sarko's proposal gains any traction.

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