Two possibilities for the EU

The European Union has to overcome a deep crisis, but how? As always, there exist a wide range of possibilities, especially when we cannot rely on past experience or previously tested options. As relates to the management of a national debt crisis or one involving a monetary Union representing seventeen national – more or less sovereign – states, there is no such record. Unquestionably, it is widely acknowledged that in order to keep the project going, its members ought to comply with the rules stipulated in the Maastricht Treaty. However, establishing the best approach in case its members fail to comply with their specific obligations, coupled by the risk of monetary Union collapse, is a different story. Basically, two options are on the table, namely, combating the symptoms of the crisis or removing its causes. The first option is apparently the easiest solution: while burdening the next generations, it could provide some respite in the short run but it wouldn’t solve the problem. In fact, it would cause its worsening with the passing of time. The second option implies initial painful reforms and victims, but it would lead to sustainable recovery and a consequential general improvement of social and economic relations in the long run, for everyone’s benefit. The crisis requires a decision by those in charge. Ensuing initial hesitation, Angela Merkel decided to opt for the second possibility systematically, thus addressing the roots of the problem, notably, combating the over-indebtedness of Member States so as to obtain the long-lasting stability of the monetary Union while stepping up governance and providing a major boost to European integration. In doing so, the chancellor was criticised by those economists who argue that mastering the negative consequences of over-indebtedness entails further indebtedness. This stand emerges in indebted Countries’ proposals of combating the monetary Union crisis with the emission of Eurobonds or through the European Central Bank’s sovereign debts purchase. Accordingly, debts would be socialised thus rendering their burden more sustainable. Notwithstanding the fact that such options are not provided for in the Treaty, they would not contribute to the problem’s resolution. In fact, such elementary provisions fail to provide an exit to the crisis. Such provisions, if implemented, would worsen the crisis further by promoting sovereign indebtedness, instead of compelling the States to mitigate their debts under market pressure, ensuring competitiveness, modernization, and sustainability. Nothing can be done without rigorous accounting standards and cost containment measures. This doesn’t mean that the States should save at all costs, as insinuated by the critics of such austerity and disciplinary policy. Along with savings, equal importance should be ascribed to structural reforms (liberalization, privatization, elimination of privileges, open markets, combating corruption, fiscal evasion, squandering etc.) Mario Monti in Italy and Mariano Rajoy in Spain have shown how things should be done. If the Eurobonds had been introduced a year ago, or if the European Central Bank had carried out a massive intervention, neither Italy nor Spain would have governments willing and capable of assuming such responsibility, undertaking the difficult path of national recovery. Indeed, the belief that South European countries are doomed to economic weakness and indebtedness is not only wrong. It is also imbued with discrimination. Despite their weakness, these Countries are not the victims of the economic strength of Germany or of other North-European neighbours. They are solely the victims of an age-old erred economy, resulting from populist politics, irresponsible political and administrative leadership, as well as from specific social drifts (corruption, squandering, fiscal evasion, want of civic awareness). Until these Countries still had their own national currencies, they could still could afford this to happen – but to the expense of the sustainable development of the next generations. The rationale of the Monetary Union and the obligation of mutual solidarity require that all Member States comply with jointly established regulations. The fact that Angela Merkel is so keen on this aspect lies in the interest of a sound evolution of the monetary union and of the Euro currency, namely, in Europe’s interest. Respecting the rules is also a prerequisite for the creation of a political Union, equipped with the tools enabling the continuation of community financial policies, organized according to federal and democratic principles, namely, those of the United States of Europe!