http://www.economonitor.com/nouriel/2011/10/03/roubini-bloomberg-interview-roubini-says-europe-needs-e2-trillion-%e2%80%98bazooka%e2%80%99/
For Europe, a Bridge Too Far to Turkey
By JOHN VINOCUR
Published: October 3, 2011
BRUSSELS — There was always, at least for its critics, something preposterous about the idea of Turkey entering theEuropean Union.
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It meant, in their eyes, Europe literally extending its frontiers to the borders of Iran, Syria and Iraq, and the E.U. adding to its membership a predominantly Muslim country whose population would soon give it the biggest number of seats in the European Parliament. As for Turkey's government, its uncertain relationship with democracy was exemplified by 57 journalists in jail — more, at last count by international watchdogs, than either China or Iran.
Now, at an increasing pace over the last six months, Turkey is portraying itself as a regional power in the Middle East, threatening to send its ships to challenge Cypriot or Israeli gas exploration rights in the Mediterranean, talking up "an axis" with Egypt, and warning of a "real crisis" with the E.U. if it allows the Republic of Cyprus to hold, as scheduled, its six-month rotating presidency next year. To its backers in Europe, this Turkey can no longer look much like an idealized bridge to a world beyond clashes of civilizations.
In the opposite direction, surveying a weakened and divisive Europe, whose resolve and forthrightness are in question as it stumbles from nonsolution to nonsolution of its economic and financial crises, the Turkish president, Abdullah Gul, insists his country has accumulated as much political influence internationally as the entire E.U. combined.
So? In the very short term, Turkey's new stance gives Europe (with Germany and France opposing full Turkish membership) a respectable alibi and respite from an issue it cannot easily solve. But in the process, the door closes on the goal of integrating Turkey into a European-led geopolitical and economic order.
"The majority of Europe welcomes the moment, thinking, `Great, the Turkey thing is off the table,"' said a Brussels official whose country backs Turkish entry. He added, "We think Turkey is worth it, and that they're a real risk if they sail off into the distance."
All the same, a new distance has unspoken pluses.
The apocalyptic notion of Europe being overrun by Turkish Muslims, brandished by right-wing populists like Geert Wilders of the Netherlands — Turkey's rapidly growing population is approaching 80 million — is deflated as a hysteria-making political argument.
Reality also says the European Union couldn't handle two existential issues at one time. The magnitude of the problems represented by Turkish entry into full-fledged membership (Germany talks instead of a "privileged partnership") appears incompatible with the E.U.'s unresolved issues of debt and deficit, an economy nearing standstill by the end of the year, and an intensifying discussion of the need for greater economic governance.
The Obama administration, so far, can praise Prime Minister Recep Tayyip Erdogan's "great leadership," be happy that Turkey will be part of a U.S. antimissile defense system, and disregard Mr. Erdogan's Putin-style remark that there are only "presumptions" about Iranian nuclear weapons intentions.
Yet the question of Turkey's new engagement in the Arab world, its falling out with Israel, and general bluster is a more intimate one for Europe. Some Europeans would like to minimize the problem.
The Brussels official who found a majority of E.U. members liking the idea that Turkey's entry seems shelved for now — I spoke to a cabinet minister from another E.U. core country who agreed — described Turkish assertiveness as "tactics, not strategy," and part of an expression of Turkey's irritation with Europe's resistance to it.
The Finnish foreign minister, Erkki Tuomioja, has pointed in the same direction and asserts, "Turkey doesn't have the means for its policy."
But if you take Turkey's Middle East power ambitions as serious — and not blowhard fantasizing — then it is the Turks who are forcing the E.U. to turn away from its candidacy. Foreign Minister Ahmet Davutoglu has said, "A Turkey that wants to become a regional power must build up its political and economic influence on the waterways from the Agean to the Adriatic and from the Suez Canal to the Persian Gulf."
The leading German research organization for international politics and security affairs, SWP, takes the point. It published a paper two weeks ago, titled "Turkey on a Course of Confrontation," whose introduction reads, "Ankara is looking to pick a fight in the Mediterranean not only with Israel and the Republic of Cyprus, but also with the European Union."
The same week, Mr. Gul, while rejecting anything short of full E.U. membership during a visit to Germany, sounded provocative about his hosts' approach to Turkish immigration. He described as a violation of "human rights" a German regulation requiring spouses of Turks living in Germany to pass German-language competency tests before taking up residence.
Earlier in the year, Mr. Erdogan, as a guest of Angela Merkel, had an imperative-type message for Turkish immigrants: "Integrate yourselves into German society, but don't assimilate."
Finding an overall response to the new circumstances is not easy.
Last week, NATO's secretary general, Anders Fogh Rasmussen, both chose to praise Turkey's "stabilizing role in the region" and dodge the issue of its charter member's warning that it might send its navy toward non-NATO Cyprus to block its exploration for gas. He said the alliance "as an organization is not going to interfere in these disputes."
On this matter, at least — if it sees a measure of immediate comfort in Turkey talking itself out of closer association anytime soon — the E.U. can ignore an active Turkish challenge to a tiny member's sovereignty only at the expense of its self-respect.
http://www.nytimes.com/2011/10/04/world/europe/04iht-politicus04.html
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Rehn: Rescue fund leveraging on the table
TODAY @ 17:39
EU economy commissioner Olli Rehn said on Monday (3 October) that European finance chiefs are considering different options on how to leverage the eurozone’s multi-billion-euro rescue fund to give it further firepower.
"We are reviewing options on optimising the use of the [European Financial Stability Fund] in order to get more out of it and make it more effective as a financial firewall to contain contagion. Leveraging is one of the options," he said speaking to reporters in Luxembourg.
Finance ministers are meeting in Luxembourg to assess the heavily indebted Greek government’s latest announced efforts to deliver on its promises of austerity and structural adjustment made to international lenders.
There are growing fears that were Spain and Italy to be cut off from market funding, the existing €440 billion rescue fund would be insufficient to bail out such large economies and even an expansion of the war-chest to €780 billion agreed by eurozone leaders in July may not be enough.
As a result even more radical options, such as the leveraging of the fund were understood to be a topic of discussion, but this is the first time that a senior EU leader has officially mentioned the subject.
“We will discuss this with the ministers,” he said. “There are options including the [European Central Bank] and options not including the ECB. This is something we will discuss today."
One possibility is that the EFSF could issue triple-A-rated bonds that could then be placed with the ECB as collateral against loans that could then be distributed to indebted eurozone states.
The attraction of this option is that this could be performed without having to return once again to eurozone member countries for further guarantees at a time when citizens and some political forces are growing increasingly resistant to the idea of what appear to them as ever-expanding bail-outs.
The commissioner also gave his blessing to the latest round of cuts and structural adjustments announced by the Greek government, despite an acknowledgement that Athens will not be able to meet its deficit reduction targets for this year or next. With an economy in free-fall, government revenues have fallen well below projections.
“Greece has taken important decisions in the past weeks, also including yesterday,” Rehn said.
On Sunday, Athens said that it will slash a further €6.6 billion from spending in an attempt to chase after budget shortfalls. The country’s finance minister also offered further details on a plan to put some 30,000 public-sector workers into a so-called labour reserve where wages are to be reduced by 40 percent ahead of presumptive lay-offs within a year.
The next day, the government presented the draft budget for 2012 to parliament. MPs are expected to vote on the bill by the end of the month.
“We are currently assessing whether Greece will meet its fiscal targets with the current measures,” he added. Officials from the so-called EU-ECB-IMF troika have returned to the Greek capital to continue their assessment of the government’s austerity efforts.
So long as the troika give the all-clear, eurozone finance ministers and the IMF board are expected to rapidly approve the dispersal of the sixth tranche of bail-out cash to the country, a sum amounting to €8 billion.
Without the funds, the country will likely run out of money to pay public servants and pensions by the middle of the month.
"We're reviewing figures and assessing measures. It seems Greece is likely to miss its target this year. Next year, the concrete measures agreed so far go a long way to meet the fiscal targets. We will assess the measures,” he continued.
The commissioner also said that ministers would have to confront not one but three major dangers.
"We have a very important meeting at a critical juncture today. We are facing three main challenges: stalling growth, stressed sovereigns and still vulnerable banks," he said.
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