Eurozone a disadvantage without changes

  • 2010-05-12
  • From wire reports

RIGA - If the Baltic countries join the eurozone without solving their competitiveness problems beforehand, they will come to face exactly the same problems as Greece over a shorter or longer period, believes Germany’s trade union federation chief economist, Dierk Hirschel, reports If the Baltic countries are not given the opportunity to gradually increase their competitiveness in the European Union, they should better stay out of the euro area, even with the problems that such a move would entail, Hirschel added.

Premature accession will take the Baltic countries to the same situation that Germany had after the unification. Those few enterprises in Eastern Germany that were still producing something had to shut down in a rather short period, because they were unable to compete with the large Western corporations, Hirschel warned.
The expansion of the European Union to the east has not fully eliminated differences in welfare levels. The money available from structural funds to, for instance, improve infrastructure in Eastern European countries is apparently not enough, said the economist. In fact, Europe is gradually becoming a federal state; however, Europe loses out to the United States, which puts incomparably more money into the states.

If the EU or the eurozone expands further, the amount of money available from the structural funds would also have to be increased significantly. Germany has increased its trade surplus fivefold since the introduction of the euro, which means that the euro area has been very much to Germany’s advantage.

Therefore, it is absolutely wrong to believe that Germany squanders money in helping other member states, said Hirschel. The euro area has existed for eight years already, but there still is no common social or industrial policy - just the market policy, he said.