Rehn Scorns IMF Dirty Water, Jabs at German-French IdeasJames G. Neuger
European Economic and Monetary Commissioner Olli Rehn defended the handling of the debt crisis, accusing critics of dumping “dirty water” on the save-the-euro effort and shunning German-French proposals to wrest control of economic management.
Rehn said the International Monetary Fund, the euro area’s crisis-management associate since the first Greek program in early 2010, went astray this week when it accused the European Commission of flubbing the restart of Greece’s economy.
“I don’t think it is fair and just that the IMF is trying to wash its hands and throw the dirty water on European shoulders,” Rehn said at a conference in Helsinki today. He said Greek growth was stunted by domestic obstacles, not by the commission’s failings.
Rehn’s self-defense came as the commission, the European Union’s Brussels-based executive agency, tries to head off moves by Germany and France to divert more power over European economic management to national capitals and away from central EU bodies.
In a joint paper last week, German Chancellor Angela Merkel and French President Francois Hollande proposed holding more frequent summits of euro-zone government leaders, appointing a full-time head of the panel of euro finance ministers, and downgrading the commission’s planned role in enforcing national reforms.
Rehn said the proposed tightening of government-to-government cooperation would put smaller countries at a disadvantage by lessening the powers of the commission. “Inter-governmentalism is often called pragmatism, but how can something be called pragmatic if it doesn’t really work or deliver?” he said.
The German-French ideas included setting up a range of economic indicators to monitor product and labor markets in each country, building on and partly duplicating a “scoreboard” now used by the commission to detect when national economies are at risk of overheating.
Rehn, one of the guiding forces behind three years of euro-zone reforms, said that many of the latest ideas from Berlin and Paris “seem to suggest that the wheel should be reinvented.”
Rehn singled out Hollande for urging stronger euro-area governance and then lashing out at the commission for making “well-founded recommendations on long-overdue structural reforms in France.” He said he is “a bit perplexed” by the French flip-flop.