Yes to solidarity, but with rationality!
In 2011, when the resources of the World Bank were increased because of the financial crisis, Luxembourg raised its hands up high. Luxembourg saves the world, and every Luxembourg resident lends the World Bank 4000 euros. Poor Belgian neighbors can only contribute 921 euros per capita, German ones 507 euros and French ones 482 euros. Since public debt is increasing in Luxembourg, why worry about 2 billion euros?
Luxembourg is not only world champion, but even world champion out category! Another example? In the context of the loan of 150 billion euros to the International Monetary Fund (IMF), each Luxembourg resident has to put no less than 4,024.70 euros on the table. Taking into account the 13 countries of the euro area participating in this loan, the average is 493.08 euros per capita. Luxembourg is 8 times better than the others: isn’t that something?
When it comes to use taxpayers’ money to control the financial crisis, Luxembourg is also European champion. The German magazine Spiegel (edition September 21, 2013) calculated that each inhabitant of Germany contributed with 264.80 euros to the European Stability Mechanism (ESM), whereas for Luxembourg the amount comes to 373 euros.
The contribution of each Luxembourg resident is 40% higher than that of a German resident. Luxembourg participates in the ESM with 200.3 million euros of paid-in shares and 1.5 billion euros of callable shares .
Luxembourg is often European or even world champion in many categories when taking into account the number of inhabitants. ADR raises the question: Who is going to save Luxembourg? Without surpluses from the Caisse nationale d’assurance pension (national pension insurance fund), Luxembourg might fail to meet the Maastricht criteria. And Brussels would interfere in our budget and in our social security system. Given what is happening in Greece, Spain or Portugal, we know what a rescue can be like!
ADR does not question the international solidarity. But it is time for the government to act with more rationality. In the future, the contributions made by our neighbors in proportion to the number of inhabitants or the average of the euro area should serve as a reference – especially as it would result in a reduction in government spending. It would be an important step towards consolidation of public finances without increasing taxes.
It is also unacceptable that the EU becomes more and more a debt union, which is by the way contrary to European treaties!
What is the ESM?
The European Stability Mechanism (ESM) was passed two years ago at Luxemburgish Parliament (Chambre des Députés). The purpose of this instrument is to support indebted countries, which may under certain conditions borrow money.
Luxembourg’s participation in the ESM capital amounted to no less than 1.75 billion euros . Of this amount, 200 million euro have already been paid (80 million euros in 2012 , 80 million euros last year and 40 million euros this year). These are the “paid-up shares”. The Parliament has no influence on callable shares (1.5 billion euros)! This amount can even be increased without Parliament’s consent!
As there is a consideration, the amounts paid by Luxembourg are not included in public debt calculation. However, the ESM has a huge impact on fiscal policy. Luxembourg had to borrow that money, and that debt is an additional burden on the state budget .
So far, two states have benefited from ESM: 41.4 billion euros for Spain and 9 billion euros for Cyprus.