April 16, 2021

The Saturday Profile: Olli Rehn Tries to Shed ‘Austerity’ Label

OLLI REHN, the European Union’s top economic policy maker and scourge of debt-fueled budget deficits, is fed up with austerity. Or at least with being tarred by a term that “is clearly used to label somebody as an unworthy person who is almost eating children.”

With more than 26 million Europeans out of work and the economies of the 27-nation bloc shrinking over all for six quarters in a row, Mr. Rehn, the commissioner for economic and monetary affairs, has become a lightning rod in recent months for swelling anger across Europe against the harsh belt-tightening policies generally known as austerity.

But in an interview, Mr. Rehn, 51, described himself as a “doctrinaire agnostic in terms of economic policy” who has read and found much of value in the writings of the British economist John Maynard Keynes, whose name is synonymous with the idea of economic stimulus in times of crisis.

A onetime semiprofessional soccer player in Finland, Mr. Rehn (pronounced ren) said the depth of Europe’s economic gloom — which has led to widespread public disillusionment with the European Union, even in richer countries — had shown that no single prescription had all the answers.

“If there were a silver bullet, we would have used it already,” he said. “There is no single silver bullet.” He indicated that policies long criticized as too focused on budget cuts were being relaxed now that the financial markets had calmed down after panic swept them at the onset of Europe’s debt crisis four years ago.

On Wednesday, he met for lunch in Brussels with the French president, François Hollande, a frequent critic of austerity, and agreed to give Paris two extra years to reach a budget deficit target of 3 percent of gross domestic product, a goal it was supposed to reach this year.

France’s more pressing problem is its flagging ability to compete, Mr. Rehn said. France enacted legislation this week to slightly loosen notoriously rigid employment rules, and Mr. Rehn said he was “looking forward to the reforms that they will continue to work on,” particularly to the country’s labor market and pension system.

Spain and the Netherlands, he added, will probably be given extensions, too, when the European Commission, the union’s Brussels-based executive arm, makes proposals at the end of the month for how each country should proceed.

Asked whether policy had changed, Mr. Rehn, paraphrasing President John Quincy Adams, said, “I see no change in policy, only a change in circumstances.” This, he said, contained “more than half the truth” to explain the European Union’s evolving economic policy.

In the early period of Europe’s current crisis, Mr. Rehn said, Greece, Portugal and other countries burdened with heavy debts lost access to financial markets and simply could not cover their expenses, leaving policy makers no choice but to push for swift budget cuts and tax increases.

“We now have more room for maneuver,” he said, explaining that cutting deficits is no longer such an urgent priority and can be pursued at a “slower pace” as long as countries recognize “that we cannot solve this crisis by building up new debt.”

The progress that Latvia, Estonia and Lithuania have made in repairing their economies through tough austerity programs shows that “fiscal consolidation” can work, he said, but does not offer a template for others. “You can never apply the experiences of one country to another,” he said.

A cerebral soccer enthusiast with degrees from Macalester College in Minnesota and the University of Helsinki and a doctorate from Oxford, where he focused on industrial competitiveness, Mr. Rehn started out as a striker with Mikkelin Palloilijat, a soccer club in his hometown, Mikkeli, in southern Finland, but decided against making a career in sports.

“I learned the limits of my talent, fortunately early enough. But I’ve enjoyed a great deal of the game for the past 45 years,” he said, speaking in his Brussels office, decorated with soccer memorabilia, a large map of Europe, a small tree and a soft toy of a grimacing bird from the wildly popular game Angry Birds, created by a Finnish game developer. He said he planned to give the bird to his 15-year-old daughter.

Article source: http://www.nytimes.com/2013/05/18/world/europe/europe-economist-rehn-rejects-austerity-label.html?partner=rss&emc=rss

Speak Your Mind