Yesterday the President of the European Council announced the postponement of the long overdue Eurozone summit which was due to take place next week. I am wondering if the Belgian Council President is now using Belgian practices of non-decision making and postponing. We all know that Belgium is now more than 16 months – since 10th June 2010 – without a government! Are we facing similar prospects for the European Union?
This would be a very bad signal towards European citizens. I deliberately mention citizens and not the financial markets. The well-being of speculators at the European and global stock exchange and financial markets should not be the first priority of European decision makers! The crisis is now first and foremost a dangerous threat for the daily life of the European citizens.
The next European summit should propose a powerful and significant framework for Economic Governance in Europe: The most important elements for such a system are regular decisive meetings of the Finance ministers of the Eurozone as well as the establishment of a special financial committee in the European parliament to strengthen democratic legitimacy of such a system. In a second phase the head of the finance ministers committee should be the European finance minister (as already discussed in former blogs).
The European Union is long overdue a response to the sovereign debt crisis with a well-defined and thoroughly developed plan. The spotlight of today, 10th October 2011 turns to the EU member state Slovakia. The future of the Eurozone is dependent on a vote in the parliament of Slovakia and of some Eurosceptics in the government. That is what, unhappily, the Eurozone crisis has come to. Necessary European reforms are endangered by some anti-European members of parliaments in the member states. But not only are European citizens waiting for Eurozone parliaments to approve the proposed structures, the European officials are still working on how exactly they should be used, as the Financial Times is reporting.
Therefore, it is more than essential to increase the power of European institutions and decision making. Only truly European structures can give the necessary powers to the European Financial Stability Facility (EFSF) and give it the emergency authority to recapitalise banks and stabilize the sovereign debts at the same time. Indeed, the EFSF, rather than the member states, should be given the responsibility for rescuing European banks. If not, we run the risk of experiencing a decrease in confidence for such a scheme, and ultimately a decrease in ratings.
It is then imperative that a sound reform of European governance is brought in. The crisis is more than a sovereign debt crisis in Greece. It is a profound crisis of Solidarity and Democracy in the European Union. In Germany conservatives and liberals are stating daily in the tabloid press, that Germans should no longer be the “paymaster” of Europe; in France left wing politicians are urging a “De-Europeanisation”; in Italy the current Prime Minister is getting more and more ridiculous with his recurring sex-scandals and the way in which he governs the country; in Finland the so called “True Finns” initiated discussions on collaterals and solidarity with Greece which have spread to the Netherlands and Austria etc….
All this is a medium and long term European issue. However the Euro zone is now under threat and the necessary long term solutions take time i.e. change of the treaties. The ECB President Jean Claude Trichet – presently still in charge – is underlying that “further delays are only contributing to aggravating the situation.” This means the need for real short term solutions for Greece but also for Portugal and Spain is required. Greece needs without any further delay the next money transfer for an immediate help.
European reality is regrettably darkening more and more. The chances for a profound reform of the treaties in order to overcome the crisis are nearly zero. And even when the next summit comes out with strong proposals it will have the risk that somewhere in Europe a referendum will bring to an end such a process.
So what is required are pragmatic short and medium term solutions. Proposals are on the table, such as for example binding national budgets with common agreed social standards, with obligatory investment plans for research and innovation as well as for education and definitely mandatory rules for the financial sectors in the different member states. Such choices are then the best pathway for further answers as European sovereign bonds and more regulation on the financial markets such as the financial transaction tax. A real sanctions mechanism should then be implemented and voted in the European Parliament and afterwards approved by the different national parliaments, paying special attention to not adding new elements of pro-cyclicality in the system.
Such proposals could be helpful to fade out the risks of further divisions within the European Union. The greatest risk for Europe is national egoism and weak spiritedness. Successful European integration was always a story of bravery and leadership. Postponing necessary decisions and not taking risks for Europe is hazardous.
No Belgian habits for Europe – this is the important message to give to the European leaders!