Rebuilding confidence

“The changes of government in Greece and in Italy represent grounds of hope for overcoming the current crisis. But especially the recomposition of the group of three, Germany-France-Italy, which they make possible, strengthens the hope of a constitutional reform that would be undertaken together and enable European credibility to be reinforced”. There are, according to Michel Camdessus, several grounds of hope in a positive solution of the economic and financial crisis that is now gripping Europe, but, in his view, there is one overriding and un-delayable need: that of rebuilding confidence. Speaking with SIR Europe, on the margins of the ‘Semaine Sociale de France’, now being held in Paris, the former Governor of the Bank of France and former Director of the International Monetary Fund (IMF), a post he held for two terms, insists above all on the need for confidence: the word recurs again and again, and is complemented with such terms as justice and fairness. A twofold crisis. “There cannot be effective structural sacrifices or measures – he says – if these are not fair or fail to take into account the various social conditions”. “Justice, sustainability and solidarity”, therefore, are fundamental ingredients to rebuild the “necessary confidence to overcome the crisis”. “We are faced by the gravest crisis that Europe has had since the Second World War – he says without mincing words -, paralyzed as it is by a spiral of despair that makes her incapable of taking decisive action to overcome it. It’s a cyclical crisis that has its roots in the past and that is fuelled by the delay with which we have put into place the necessary measures of realignment – measures that are now more onerous in the current global context in which many countries are called to implement adjustment measures to curb spiralling sovereign debt”. But the cyclical crisis – Camdessus continues – is also compounded by the crisis of values that derives from the weakening of two European pillars: namely, “social market democracy and participative democracy”. Two pillars. “The social market economy is a form of economy to which can be applied a democracy founded on such values as solidarity, support, justice and economic efficiency in favour of the weakest members of society. The other pillar is participative democracy: Europe was founded on the basis of a model of participation by the citizen. Now that this element has declined, or been lost, we realize that the European institutions do not have the necessary strength to take harsh measures and make the necessary reforms”. “It’s a task that will take not just a few months, but years”, warns the economist, who repeats: “the cost of this crisis must be fairly distributed, having justice at heart. The spiral of growing indebtedness does not just weigh on society today, but also on future generations. It places at risk not only the market, but also our children”. Hence the need to “support, at the level of public expenditure, the disadvantaged, the young, the unemployed, families and training, with the creation of an economy of innovation”. To this should be added, among the various proposals, “a reform of the tax regime, deduction at source, together with salary regulation”. According to Camdessus, some salaries in France are “totally scandalous, especially in this time of crisis”. He calls for just sacrifices in proportion to wages and salaries to “rebuild confidence and make the French understand that hope is not lost, as Italian Prime Minister Mario Monti said”. Technocrats and politics. Commenting on the new Italian situation, Camdessus says he is convinced that “a government of technocrats does not mean the sidelining of politics”. “The distinction between technocratic government and political government – explains the former Director of the IMF – is artificial since the government is composed of persons who have a good grasp of the problems and are therefore able to propose the most suitable policies to address them. I am persuaded that the Monti government is composed of individuals of considerable expertise and great moral stature. They are men and women who for this reason can restore confidence to their country”. Active participation of citizens. “This crisis is not merely the result of the public debt or the value of the euro on the currency exchange markets”, insists Camdessus, who does not believe that an eventual exit from the Euro of this or that country could help to find a solution to the crisis. Even the proposal of Eurobonds, “while technically feasible, would have to be inserted in a credible effort and really linked to the action of governments in terms of the realignment of their budgets”, without which the issuing of such bonds would become difficult and could lead to a further delay in making the necessary structural reforms to budgets by curbing the spiral of debt”. “This crisis – he concludes – is also linked to the problem of the role of the citizen of the EU. The path to overcome the crisis is, therefore, that of rediscovering the democratic foundations of a Europe called to resume its role in the world: a role that cannot be fulfilled without the active participation of its citizens”.