Initial reluctance replaced by strong leadership

Jean-Marie Majerus
Luxembourg’s political class, as well as its Prime Minister and President of the Eurozone, seemed to ignore – at least at the beginning of the year 2010 – the real size of the Greek crisis. Jean-Claude Juncker declared on 5 March 2010: “I don’t believe that the country [Greece] needs help from outside.”[1] Luxembourg’s public opinion had no understanding for xenophobe, populist headlines as they appeared in German popular press: “Greeks are lazy, corrupt and underdeveloped!”[2] Luxembourg’s population also knows that European solidarity has its limits and it still remembers the loud and unfriendly, if not insulting, statements of German politicians made two years ago when Luxembourg’s fiscal policy was their focus.
When the full extent of the Greek crisis became obvious in April 2010, even the Juncker-friendly Luxembourgish press blamed the President of the Euro group, recalling his overly optimistic declarations made in March 2010: “We have the torture instruments in the basement and we’ll show them if necessary.” The so-called “Greek conspiracy plotted by American hedge funds and investment banks” legend was forged by European politicians to divert public opinion’s focus from their own failure.[3] This affirmation doesn’t stem from a narrow-minded Marxist-Leninist ideologist, but was written by the editor of the Catholic Church owned, main Luxembourgish newspaper Luxemburger Wort.
In fact, the Luxembourgish taxpayer has to bear a heavier burden than his German counterpart, as Jean-Claude Juncker pointed out in an interview on a German radio station on 1 June 2010: “The net contribution of the Luxembourgish taxpayers for the Greek aid plan, as well as for whole Euro plan, is much higher than the average contribution a German taxpayer has to bear.”[4] Even though the Luxembourgish constitution would have allowed Finance Minister Frieden to pass the Greek aid plan without a parliamentary debate, the Finance Minister did so because of the enormous amount.[5] There was no real contradictory debate on helping Greece in Luxembourg, unlike in Germany.
Altermondialist and communist analysts blame the international finance markets, which allow big banks to offer credit to Greece at higher interest rates and hence to make even bigger profits than before, at the expense of the working class people. They denounce the cruel austerity policy imposed on Greece. Only a radical reform of the system can help prevent another “Greek crisis.”[6]
Green Members of Parliament and Members of the European Parliament sent an open letter to the President of the Euro group. They asked him to force banks to stick to their responsibilities and protect the Eurozone against unforeseeable, gambling financial markets, to create a public rating agency and tax financial transactions. Luxembourg, as a founding member of the European Communities, should be a vanguard in the coordinated European action against speculation.[7]
Jean-Claude Juncker himself wants to implement the Stability and Growth Pact with even more energy. Therefore, it is absolutely necessary, in his eyes, to consolidate the budgets of the Eurozone countries, decide structural reforms and to raise the competitiveness of the economy. In the end, this policy leads, according to Jean-Claude Juncker, to some kind of “European economic governance”. The worst economic and financial crisis since World War II can only be solved, according to Jean-Claude Juncker, in a common effort.[8]
Does “a strong coordination of economic policies in Europe” mean a kind of “economic governance”? Some heads of government will not be very pleased with this perspective. Are the member states ready to coordinate their economic policies?[9]
 “Germany and France may both talk about enhanced economic governance but they mean very different things by it: for France, interventionism; for Germany, the harmonisation of rigour.”[10]
Jean-Claude Juncker revealed that “he had to bring a lot of patience to reconcile French and German positions concerning the saving of the Euro.”[11] Whereas Angela Merkel asks for an “economic government” for the whole European Union, Juncker wants to begin with the creation of a closer cooperation of the economic policies of the Eurozone countries.[12]
The economic governance of the Eurozone needs profound reshaping regarding the Euro crisis. After the finance ministers’ meeting in Madrid, Juncker declared that he is on the same line as Olli Rehn: a strengthening of budget surveillance is absolutely necessary.[13]
Juncker said that the markets are reacting irrationally. “There are expectations that growth is slowing down because of the deficit cuts we have to take,”[14] Juncker said in Tokyo. “There is a certain reluctance to believe the Greeks can overcome the current crisis. I don’t think the markets are behaving in a rational way.” After hitting a four-year low, the Euro has edged higher. However, political divisions in Europe and fears of tighter financial regulations after Germany’s unilateral move to ban naked short selling on some instruments kept investors edgy and stocks pressured. Juncker said, “I’m concerned because the rapidness of the fall of the Euro is impressive. I’m not concerned as far as the current exchange rate is concerned.”[15]
Among the remedies discussed on the background of a dramatically deteriorating situation in the Eurozone countries is the introduction of a common bond. Jean-Claude Juncker has backed the idea of a common bond as a logical step forward in the development of the Eurozone.[16]
A communist political analyst was the only one to vigorously criticise Juncker’s action as President of the Euro group.
In Luxembourg, political party leaders and civil society representatives acknowledge the importance of the Europe 2020 Strategy for the future development of the EU. But many questions remain to be answered: Who is going to coordinate the different strategies? What will be the responsibilities of this coordinator? Every member state can define its own way to achieve the Strategy. Who is going to coordinate the member states’ ways to act?[17]
Luxembourg’s Labour Minister Nicolas Schmit (Luxembourg Socialist Workers’ Party – LSAP) fears a lack of coordination in the implementation of the Europe 2020 Strategy: “Will the traditional ‘Schuman method’ be replaced by a vague ‘coordination of policies’?” If this happened, the success of the Europe 2020 Strategy would be seriously jeopardised.[18]
A communist political analyst was very sceptical concerning the success of the Europe 2020 Strategy: in his eyes, it is not ambition alone that is necessary to fight the rise of the unemployment rate.[19] Generally speaking, there is a great scepticism concerning the success of the new Strategy.

[1] Camille Leroux: Désunion, Le Quotidien, 6 March 2010.

[2] NDR Fernsehen: Feindliche Berichte über Griechenland, 10 March 2010, available at: (last access: 22 June 2010).

[3] Pierre Leyers: Euros nach Athen, Luxemburger Wort, 27 April 2010.

[4] Bayern2: Der Euro und der Rücktritt des Bundespräsidenten Horst Köhler, 1 June 2010.

[5] Chambre de députés, Projet de loi N°6142.

[6] David Wagner: Le cheval de Troie, Woxx, 21 May 2010.
Uli Brokmeyer: Mit der Krise Profit machen, Zeitung vum Lёtzebuerger Vollek, 5 May 2010.

[7] Tageblatt: Griechenland – Krise, 7 May 2010.

[8] Ibid.

[9] Hortense Bentz: Die Richtung weisen, Luxemburger Wort, 25 March 2010.

[10] The Economist: Charlemagne: Financial fortress Europe, 14 May 2010.

[11] Berliner Zeitung: Kopfschütteln und Befremdung, 21 May 2010.

[12] Mehr Einmischung, 20 May 2010.

[13] Le Quotidien: Weekend laborieux à Madrid,19 April 2010.

[14] Business and Finance Daily News Service, Juncker says markets irrational on euro, 20 May 2010.

[15] Ibid.

[16] Financial Times: Common bond could help stabilize the eurozone, 20 May 2010.

[17] Hortense Bentz: Die Richtung weisen, Luxemburger Wort, 25 March 2010.
[18] Conseil EPSCO, 8 July 2010, available at:  (last access: 14 July 2010).

[19] Uli Brockmeyer: Mit ihrem Latein am Ende, Zeitung vum Lёtzebuerger Vollek, 27 March 2010.