28 April 2020

Politico: Thomas Piketty: Willing EU countries should spearhead fiscal union

The time has come for bold fiscal and political integration in Europe, French economist Thomas Piketty said Tuesday.

Faced with pressure from financial markets on the one side — which could risk another sovereign debt crisis — and angry voters growing impatient at a non-transparent Brussels on the other, the EU must move toward fiscal integration or risk a catastrophic reckoning, Piketty said in a wide-ranging interview with POLITICO’s Brussels Playbook.

The author of “Capital and Ideology,” a 2019 book that details the impact of various policies on inequality, including in the EU, issued an impassioned plea for democratic reform.

“The fact that we still have today these eurozone meetings … behind closed doors … I know people in Brussels are accustomed to this and think this is the only way to organize things. But this is a disaster. This is exactly what makes everybody hate Europe. And this will have to change.”

He also said that opposition from Germany and the Netherlands should not discourage France, Italy and Spain from issuing joint debt, known as eurobonds or corona bonds, as a way to tackle the fallout from the coronavirus crisis.

“The structural problem with the eurozone is that the rule of unanimity for all budgetary matters is something that does not work and will not work” — French economist Thomas Piketty

“It is perfectly possible for two countries, or three and four countries — France, Italy, Spain — to create corona bonds,” Piketty said about European answers to the crisis, and thus “mutualize interest [rates].”

Piketty insists in his book that issuing joint debt shouldn’t be characterized as debt pooling, as EU countries wouldn’t pay back each other’s debt, and denounces the political climate that has made policy debates around eurobonds a non-starter for years.

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