“Neo liberalism is not popular but it is more important than bankruptcy’, that was the stinging theme that ran throughout of Polish Minister for Finance Jacek Rostowski speech on European Governance and the Financial crises at Central European University, Budapest April 7.
Rowstowski, in Budapest for a two-day summit to discuss, among other things, the size and terms of Portugal’s bailout offered a very sobering economic picture for the upcoming years. He warned that further belt-tightening will be necessary throughout the EU.
“If we want to improve growth rates we have got to unpleasant things. Until now there has been agnosticism about what needed to be done to ensure economic growth,” he said.
He also warned that the sense of entitlement to the social benefits that European countries have become accustomed is misplaced.
“We have to roll back the rights we gave ourselves in 1990s and 2000s,” he said. “[Citizens] do not have right to excessive entitlements.”
His comments seemed to be aimed at some of the countries of Western Europe who, unlike many of the countries of the Central and Eastern European region, had not made the tough reforms seen as necessary to increase their competitiveness in the 1990s.
With Poland the only country of the Euro 27 not to go into recession during the financial crises Rostowski does enjoy plenty of legitimacy to lecture about competitiveness within the EU. Indeed one thing that has been apparent throughout the financial crisis is the shift in the relative balance of power towards the new member states, vis-à-vis many old member states.
Unlike the PIGS (Portugal, Ireland, Greece and Spain) on the periphery of Europe, the countries of the region have reacted to the financial crises with no defaults or major social unrest. In an editorial for the Center for European Policy Analysis this week Edward Lucas, International Editor for The Economist, wrote “the contours of political and economic powers have shifted during the crises, to the benefit of the ex-communist world”.
Competitiveness Pact
Rostowski also voiced his support for the new European Competitiveness pact, a plan that would see eurozone members agree to closer economic convergence. Speaking about the competitiveness pact he said it made “a great deal of sense” adding that “structural reform is needed not just for emerging markets but for the EU also.” He declined to comment on Hungary’s decision not to sign up to what has been dubbed the “Euro Plus Pact’
In rejecting the pact, Hungary has cited the pact’s principle of harmonizing the tax system as a problem which runs counter to the country’s interests.
“We don’t have the slightest intention of raising taxes, we shouldn’t t take part in a pact which would demand this of us.” Hungarian Prime Minister Viktor Urban has said.
The Czech Republic along with Sweden and the United Kingdom has also opted out from joining the Euro zone plus pact.
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