Transaction tax

At the G20 summit in Cannes, eurozone countries failed to implement a worldwide financial transaction tax. It wasn't the first time. Many experts say such a tax only makes sense if it is global, otherwise the transactions will simply move to countries that don't have the tax.

But Belgium's Finance Minister Didier Reynders doesn't want to wait forever.

"If it could be implemented in the European Union, that would be a good development," he said. "If that doesn't work, then we should do it in the eurozone. It has to be possible."

Reynders' Austrian counterpart, Maria Fekter, agrees.

"That would send a signal to the markets," she added. "The markets cause problems for us, so they should also be ready to be part of the solution."

Slowing growth?

If it's only the eurozone that adopts a financial transaction tax, it would, for example, have no effect on a country like Sweden, which has its own currency. But the country's finance minister, Anders Borg, still wants to try and keep the eurozone countries from adopting the tax.

"The financial transaction tax doesn't work," Borg said. "It is only successful at slowing growth in Europe, and the tax would also raise the cost of credit for indebted nations."

There are even doubts within the eurozone. Luxembourg fears that financial institutions would simply pass the tax on to their customers, and has therefore only given the idea a "yellow light."

Deepening political crisis

Borg believes that the EU is too busy with smaller matters such as the transaction tax.

"Europe is losing its credibility," he said. "The solution for the crisis of high debt must be less debt. The responsibility for that lies with the states with the high debt and that's, of course, Greece and Italy."

In both countries, high debt is combined with a political crisis. But while Greece is apparently on the brink of forming a national unity government, the political insecurity in Italy continues - and the threat that Italy will be infected with Greece's virus.

Advice from non-members

Eurozone countries wanted to build a firewall around threatened countries like Italy, and British Finance Minister George Osborne still misses it.

"It's all very well saying we've got the firewall,'" he said. "But we need to convincingly show the world that the firewall exists and that it has sufficient resources in it."

Those are exactly the words that many eurozone governments are so worked up about. Britain doesn't want to adopt the euro and wants to be as uninvolved as possible with rescue packages, but freely dispenses advice on how the eurozone should overcome its debt crisis with comprehensive tax-supported measures.

London is also one of the sharpest critics of the financial transaction tax.

Retaining the appeal of operating economically

The size of the firewall against contagion is not the decisive question for German Finance Minister Wolfgang Schäuble.

"There is no lack of investors in the world that want to invest in Europe. There is a lack of trust," he said, adding that the firewalls are important for "the transition period."

That also includes the recapitalization of the banks and putting the rescue fund, the EFSF (European Financial Stability Facility), to better use.

Schäuble considers fiscal responsibility to be of the utmost importance.

"We can't lose the incentive that leads to all countries, least of all those in the eurozone, to fulfill their responsibilities of a stability-oriented financial policy," Schäuble said.

That reflects Schäuble's reaction to fears, not least of all from Germany, that the eurozone would overwhelm everyone because it handed out help without any conditions.

Author: Christoph Hasselbach, Brussels / mz
Editor: Nicole Goebel