BEIJING - "Europe" is no dream, no
political mission; it is not something that will
drive people to cast their heart over all risks.
Nevertheless it must be pursued for very practical
reasons in the interests of everybody, including
Germany. This is the European Union according to
German Chancellor Angela Merkel, who clearly
framed the central issue of the present euro
crisis in a recent interview with German TV
network ZDF: Germany would be willing to help
weaker states that are facing difficulties, but in
return would expect more European control over
those member states.
This is a very
positive message all around for Europe. It is a
clear signal that Brussels will gain greater
political union with those "negligent" states. And
it is a clear message to the markets and those
people speculating against the euro that Germany, the
largest economy in the
euro area, will indeed intervene to defend the
common currency.
"There will be no
solidarity [in Europe] without controls," said the
chancellor. She also offered a reminder that, "if
you have a common currency, that means, of course,
there are advantages in addition to obligations,
and the policy decisions of each member affect
other countries. We have to be more engaged" in
rigorously monitoring the situation, the
chancellor continued, adding that it "must give EU
institutions more power to act against countries
that do not respect the rules. A control that is
binding and would not allow easily violations of
the rules that we have imposed."
Merkel
then reiterated her call for increased powers on
the European Union level. Europe must become more
bound together, she said, and the fiscal pact was
a step in this direction. She added that European
institutions should have greater powers to
sanction member states that do not adhere to the
rules.
However, the responsibility for
salvaging the common currency now has turned from
Berlin to the capitals in financial jeopardy. They
have to decide whether to accept greater control
over their financial systems from Brussels or to
simply leave the euro. It is a political choice
about sovereignty in those states because their
governments, for whatever reason, have been unable
so far to put in place the necessary measures to
rescue themselves on their own.
The
financial crisis then clearly becomes a political
challenge. Are the profligate PIIGS (Portugal,
Ireland, Italy, Greece, and Spain) willing to give
up part of their sovereignty to the European
Union? In this case, whatever their answer is, it
will be positive for the European Union in theory.
If those states decide to retain their
sovereignty, then they simply and voluntarily move
out of the euro zone. This is a voluntary
secession that should not expose the union. If,
conversely, those states decide to stay in the
union by giving up part of their power to
Brussels, they will reinforce the EU and
contribute greatly to creating a stronger
political union in the old continent.
The
real issue is not so much for the smaller
countries, whose decision to move out of the
united currency could be somehow digested by the
union, but for the larger economies: Spain and, of
course, Italy. If either of these two countries
were to leave the union, this could trigger a
chain reaction, creating a crisis of continental
and global proportions.
However, if either
of these states were to be salvaged without
controls put in place, this would not only anger
German taxpayers, it could have the potential to
suck dry Germany and all the virtuous northern
countries, who could end up paying through their
noses to countries that are wasting those
resources.
Therefore, political control
over those profligate countries is an absolute
necessity to save those countries from themselves
- and of course, to save the virtuous countries,
headed by Germany, that are willing to lend a
hand.
This necessity creates very
different scenarios in many European countries.
Brussels will have to put in place tools enabling
it to gain effective control over the economies of
these countries. That is, Brussels will have to
gain access to meddle in the financial, education,
and healthcare systems of the Italian and/or
Spanish state - and possibly reorganize those
sectors. It is a huge task for Brussels and for
the profligate countries.
In this case,
Italy and Spain can either wait for Brussels to
reshape their own state structure, or they can
move ahead themselves to limit external
intervention. Recent moves by Madrid to fix the
banking system and by Rome to deal with state debt
and the sale of state assets are going in this
direction. Italy is again the centerpiece of this
reorganization.
Last week, Italian Prime
Minister Mario Monti gained some confidence from a
selected group of American businessmen and
politicians for his program of restructuring the
economy. After that, he launched a program of
privatization of state assets, which could fetch
in the market some 600 billion euros (US$737
billion) of new cash, something that could reduce
state debt by 30%. These programs have to be
carried out over a longish period and will change
the political and social structure of Italy and of
all interested countries.
Millions of
people will have to change their life, their very
thinking. For this reason they have to be strongly
motivated, and a cold, dry calculating message
will not suffice. This perhaps is what is missing
more than anything else from Chancellor Merkel.
Millions of Europeans can't be expected to
change their life, to lose the national
independence that drove their lives for over a
century just for some petty accounting reasons. It
is hard to calculate accounts; long- and
short-term interests may conflict; moreover,
people need more than money to survive.
In
China, Deng Xiaoping drove reforms that changed
his country's and the global economy. Putting on a
cowboy hat, he gave people in and out of China a
dream, that they could become as wealthy as the
Americans.
European states, in or out of
the euro, is at a political crossroads, and for
this Merkel needs to give a dream to the people.
This is what we are all, including the markets,
are waiting for.
Francesco Sisci
is a columnist for the Italian daily Il Sole 24
Ore and can be reached at fsisci@gmail.com
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