Economic unions made in heaven and hell

For some years now global economies have been under pressure with the result that the global economic landscape has undergone significant change. Powers-that-were are still struggling with the effects of the recession (which is officially over but tell that to struggling citizens) and new powers have risen. We've seen a strengthening of ties in some countries and weakening ties in others. The Euro is taking strain as some European countries grow tired of being held back by others. But could we see a new power rise out of a union between Australia and New Zealand?

The Anzac dollar?

Despite the friendly antagonism that exists between the two countries, they do well from mutual free trade agreements. So much so that BBC News reports that we could soon see the economies tied even more closely together.

Australia and New Zealand have recently had to contend with some of the worst natural disasters ever to hit them; Australia with wide-spread floods and New Zealand with a particularly devastating earthquake. In a spirit of goodwill, which could be said to typify the people of the region, they have helped and supported each other and forged new relationships and partnerships.

Last month the two countries took another step closer to forming a single economic market when the two Prime Ministers, Australia's Julia Gillard and New Zealand's John Key, signed a new investment pact.

BBC News cites Tim Hazledine, a professor of economics at the University of Auckland Business School, who said that both countries would benefit from a common currency (which he thinks should be called the Anzac dollar). He justifies the idea by saying, "The common currency idea has been pushed back a bit by Portugal, Ireland, Greece and Spain abusing their membership of Europe's currency union to let their public sector deficits get out of control. In New Zealand our deficit hasn't got out of control so there's a lot of potential in exploring the Anzac dollar."

Hazledine has some opposition from Peter Conway, the secretary of the New Zealand Council of Trade Unions. Conway is against a common currency and even cosier markets because he thinks Australia already has too much influence over New Zealand's economy. He likens the current situation to colonisation - economic colonisation.

European economic interference

Meanwhile, back in Europe steps are being taken that could allow the counties in the Eurozone to interfere in one another's economic policies. Once again BBC News reports on a draft document that effectively entitles countries to have input into their neighbour's policies and which would require each county to commit to certain economic targets.

Officially it's being covered in much softer language. Take for example the statement that at the upcoming meeting between Eurozone leaders, discussions will take place regarding a "shift to a higher level of policy co-ordination" and for "concrete commitments" in economic policies. The aim is to "deepen the economic pillar of the monetary union by fostering convergence among the economies of the euro area" and avoid "economic imbalances".

We'll have to wait until after the meeting which starts on 11 March before we hear any final details. But at a guess, it's possible that countries like Germany will balk at the thought of Greece having a say in its financial affairs.

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