Taboo – in what EU and SU are similar? - Part 2

As early as in 1998, while visiting French Senat, I participated in a meeting which was to discuss introduction of Euro, where I tried to explain how badly soviet common currency worked. For those who are unfamiliar to the money theories I would say that money, if it is printed by government and is not attached to gold or silver, such money will be always influenced by a trust to the issuant government, its policy, how much money will be in circulation. Money strength and convertibility will always dependent on what you can purchase for that money in that particular country that issued it. For that reason behavior of the economy, export competitiveness of the production seriously influence the money issued by the government of that country (of course this is not applied to gold money). This is one of the reasons why common currency is so problematic. In this case money gets another function of re-distribution of wealth, of subsidizing. In the case of the Soviet Union soviet ruble was backed in fact only by its natural resources. Most of its member soviet republics contributed very few to the export potential of the union had been subsidized by some stronger republics (though another way of cross-subsidizing was the artificial price system).

Something similar you can also observe in the current European Union – Germany subsidizes Greece, Portugal and others by the Euro. In this case the Euro is supported by the German competitive economy. It’s very important to recall why the SU was ready to keep the common currency - denying of subsidization could give a strong impulse of its dissolution. In current Europe subsidization is justified by the reason of solidarity although everybody is afraid of its dissolution. And if dissolution of the EU is so simple, it is clear, that its artificial unity is very costly to for its people. The situation (as the political leaders suggest) is: either Euro, or common currency and support to weak or everybody by themselves.

It was clear already two years ago that “support” to Greece was just to postpone a solution and I think nobody believed that this was a solution. But because of political reasonability, leaders of the EU favored a temporary anesthesia to a treatment of the disease. Now one of the solutions proposed for solving of the problem is considered fast movement towards a fiscal centralization, which is also quite familiar to ex-soviets.

Soviet Union was a closed economic space – it treaded only with its satellites. This was necessary to protect its own economy and the government used several kinds of propaganda methods to justify this. Sometimes this was for ideological – anti-bourgeoisie reasons, but sometimes against the invented by itself, the western threat, theories of conspiracy.

Today developed nations also frequently use protectionist policies. Sometimes, for instance, it is used to punish some nations which violates international rules, the way as Russia still behaves against Georgia and others. But if we are not surprised by Russia’s government– like Soviet one – which doesn’t care about friendship but instead tries to make its neighbors obeying, to see similar from the European Union was a big disappointment.

Unfortunately it has to be said that our expectation for the trade with the EU appeared to be overestimated – at least this seems to be correct by now. It was very unpredictable for instance to discover that the EU would not have written rules for trade policy, would negotiate this kind of issues by unclear, double-readable and open-for-interpretation correspondence. Some of the requirements the EU issues for the trade have nothing to do with trade (and some others which really have something – never been considered). Partner nations are required to have the same regulatory system as of the EU, including in the spheres, and despite of the reality that deregulated economies cannot make any damage to the citizens of the EU. Clear and written rules would be especially important to be sure what, when and why they can be changed in future, how and who violates the existing agreements.


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