Eurozone: The growth imperative
10 May 2012
Il Sole-24 Ore
The elections of May 6 have revealed the dramatic split between politicians and citizens. To prevent it from degenerating, we must abandon the obsession with austerity and discussions in small committees and restart the engine through the solidarity and integration that are the hallmarks of Europe, according to one columnist.
Enough of the Europe of the arrogant, the leaders who only know about survival of the fittest. Enough of the Union which has degenerated into a feudal pyramid, with one large state – the only true sovereign – at its head, and a plethora of other vassals and peasants following its orders. Enough with Europe’s impotent (yest inconclusive) proclamations: it is outrageous that while the economic crisis is causing such destruction, austerity is following in step and employment is scarce. Up until this week’s Super Sunday, we had not been so acutely aware of the scope of the chasm in Europe, between its ruling classes and its citizens. A divide that has grown at the very heart of the joint project that is not only now slowing but that has wound up undermining the very spirit of its foundations. And it continues to ignore the reality – discontent, growing frustration and the increasing problems of its citizens. This is behind its loss of adhesion to them. It is not quite a vote against Europe, but it is close. Now, Europe must either start over and turn itself around or sooner or later it will perish. In order to mend the relationship with its people, it is in urgent need of two things: economic growth and politics.
An ocean of mistrust
For starters, it needs to: retain control of the democratic process at all levels – including inter-institutional; reject any drift towards "directorates"; rediscover their shared ideological rights and the relative equality of states before the law, as well as the principle of unity in diversity (not uniformity). It is only in this enterprising way that one can hope to overcome the crisis of confidence, and bridge the ocean of mutual distrust that now poisons European interaction. But without tangible economic growth – not just words – without new jobs, bridges, trans-European motorways, digital networks and energy, in short, without a Europe of opportunity and hope to replace the Europe of austerity and despair, it will not pull itself free of this stagnation. It would be an illusion to believe that the France of François Hollande, who was elected on a campaign focusing on relaunching the European economy, can alone override German obstinacy. Finally, in order to avoid elsewhere in Europe, a repeat of the nightmare in Greece, where excessive austerity saw the usual democratic boundaries being vaulted last Sunday and the unusual rise of extremists across the board, Paris needs to form some kind of holy alliance. This will act as a solid counter-weight to the superpower of Germany, which has been running wild without proper safeguards on its influence.
Myopia and selfishness
One thing is clear: a path to growth amid austerity is required in order to be able to talk seriously with Angela Merkel and that Hollande seems to be wedded to this path. The agreement of Italy’s Mario Monti, with the European Commission’s Jose Manuel Barroso, with Spain’s Mariano Rajoy, and with not only Portugal, Greece and Belgium, but also the Netherlands, is only a matter of time. The extraordinary summit of heads of state and government on May 23 could be an opportunity to test this new power alchemy, along with some practical recipes for kickstarting the economy. This is no simple task because there are lots of ideas on the table: “project bonds” to finance major infrastructure works and increase the capital of the European Investment Bank; the reorientation of unspent EU structural funds; a tax on financial transactions; then there are eurobonds in the near future. And furthermore: the introduction of a golden rule to exclude investments in sustainable development from the deficit calculation and a more flexible interpretation of a fiscal pact to extend the terms for clearing public accounts and to make it socially and economically more acceptable. These are the ideas that, one way or another, will be the call for solidarity and cohesion, meaning the European spirit which has been lacking during the last two years of the crisis, or appeared only too late and was hamstrung by the markets, while being buried by short-sightedness and dominant national selfishness. Growth is essential but to be truly European and sustainable, it needs some other elements: more integration at all levels; reform of the statutes of the European Central Bank, its objectives and its room for manoeuvre, after ten years of the euro and the globalization of economies and markets; a model of society and development in tune with our times; political union. Without these, the euro will struggle to survive for long. The challenge is enormous. It requires a cultural counter-revolution to rediscover a lost Europe. Is this feasible? What is certain is that restarting the economy is the first step towards reconciliation with its citizens. A project that destroys growth will not seduce them. The rest will follow if governments can learn to trust each other again: if they all speak once more on an equal footing, amid mutual respect and rediscover the value of their common interests, in a global world where Europe is becoming smaller every day. And where it must quickly learn to act .