Ülo Ennuste Economics

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A Note




   …. For the better clarification and avoiding anxieties concerning  the “variable geography” (Pisani-Ferry, Sapir and Wolff  2012)  of the after ESM reform developments in the EU governance complexities – very operational may be to introduce into the narratives some elements of formalizations – some tentative suggestions in this directions are made in the Annex.






  A Sketch of formalization of the “geometry” of the EU Macroeconomic Governance Hierarchy after ESM Reform and Estonian Position


  This Sketch is mainly based on (*) and in partly on Estonian Position on (**).


  From the first source for the introduction p 1:


 “The euro crisis and subsequent policy responses have challenged the assumptions underpinning the governance of the euro area, and the relationship between the European Union’s euro- and non-euro  Countries. The euro policy regime has become increasingly complex and difficult to manage, raising the question of the accountability of decision making to citizens. Complexity also threatens to create frustration for euro area members, which fear that initiatives to strengthen the euro will be hindered, and for non-euro members, which fear that they will be de-facto deprived of their say in decisions of major relevance to them.”


  It is easy to see in this situation of the EU after ESM reform developing variable complex macro-governance hierarchy geometry with many overlapping of the mechanisms and regulations – it may be for the better clarification very operational to introduce in the narratives some elements of formalizations as on the hierarchical coordination levels as on the Member-Counties positions structures. Just to classify the complex and many-dimensional problems more rigorously/ transparently and alleviate complexity frustrations.




The General Geographic Model of the EU Macroeconomic Governance Hierarchy (Country Matrix […] + Coordination Mechanism {…}):




 R – rebuilt


 M – set/number of the Member-States


 e – euro-countries


 n – Non-euro Countries




c – core


 p – peripheral


 LT – the Lisbon Treaty based mechanisms




ESM – the European Stability Mechanism in complex (European   Semester … and rebuilt regulations and institutions)



Note the Regulation Network on the Institutional Matrix


 Table …….


 See p 8 (*).




 Remarks on the Estonian Position idiosyncrasies cluster in the European Semester context in the Mep group (Narratives based on (**) and (***))


 E.g.: Cee=( … Xc-… )




 Where X may mean Estonian Convergence indicator in the Mep, c – level not satisfactory, and minus sign indicating worsening perspective




 Narratives for finding most significant indicators


 „Estonia’s GDP growth was 7.6% in 2011 and is expected to be 1.7% in 2012 after 24% decline during 2008-2009. The budget deficit is expected to be 2.6% in 2012.”(**).


  Estonia’s general convergence position regarding the EU states at the time is detonating – labour and capital is anomaly flowing out of  Estonia, inflation is high, NNI pc is low, gross foreign debt is on average level compared to the payment facilities, and the tax system is unbalanced, and general welfare declining and real inequality high and increasing , ethnic conflict is impeding economic evolution and Country has not enough bargaining to alleviate it, the quality of public national macroeconomic competence is low and the ESM reform is increasing anxiety and populist policies, etc.(***).


  „Estonia is interested in strengthening the euro area, the common financial market and competitiveness of the EU. Economic and financial policy of the EU should be sustainable and the member states should fulfil the requirement of the SGP, (Estonia’s EU Policy 2011-2015, 2011). … Estonia is looking forward that the budgetary rule introduced by fiscal compact will support the achievement of EU priorities.” (**).




 „Estonia is interest in sustaining its tax system, which is very strongly biased toward indirect taxes, there is a proportional income tax and retained corporate profits are taxed with 0% corporate income tax. Estonia is interested at the same time in harmonisation of rules for value added tax and excise tax (abolishment of exceptions) and some kind of harmonizes tax base for corporate income tax, operating on the EU market” (**).




  (*) Jean Pisano-Ferry, André Sapir and Gun tram B. Wolff. (2012). THE MESSY REBUILDING OF EUROPE. Bruegel Policybrief ISSUE 2012/01  MARCH 2012: http://www.bruegel.org/publications/publication-detail/publication/719-the-messy-rebuilding-of-europe/           


  (**) Alari Purju (2012) Euro crises, old and new trilemmas and Estonia’s position. Draft 30.III 12. “Baltic Journal of European Studies“ Vol 2, No 1, 2012. (In Press – do not quote).


  (***) Ülo Ennuste (2012)  Waiting for the Commission Strengthened Governance Coordination Leviathans: Discourse Memo for the Actors in the Macro-Game “European Semester”- “Baltic Journal of European Studies“ Vol 2, No 1, 2012. (In Press). 





April 25, 2012 - Posted by | Uncategorized

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