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Leveraging the December 9 deal - News Comment

Despite the difficulties involved, we firmly believed that the best way forward was to reform the current treaties(1). But we never imagined that the British would be so intransigent. The British withdrawal can only be described as regrettable, especially since it considerably complicates the legal construction of the new proposals. But this agreement is a step towards greater integration. But the fact that this integration will be brought about by intergovernmental means- and not community ones - is highly paradoxical. Between the German position on federalism, the perplexity of the European Commission and the French debate on the refusal of sovereignty delegation, the lines are far from clear. The Commission is playing an important role, but it is not an economic government. As for the European Parliament, it does not have any decision-making authority as regards national budgets, but its participation – alongside that of national parliaments- is essential. It is vital that national governments be involved in the integration process; national heads of state and government are still the first responsible in the eyes of the public opinion. But the challenge lies in creating a new governance system that is strong enough to establish stability and re-dynamize growth in the Eurozone and in the Union as a whole, in the global arena. The legal controversies are only just beginning. Let’s hope that they will not monopolise the debate to the detriment of the economic and social realities and imperatives.

While this agreement undeniably provides a springboard for action, is it enough to create a real economic government? First of all, it allows for progress in terms of firewalls: the application of IMF rules on the participation of private investors should enable us to “rectify the biggest mistake of the crisis” and to prevent the kind of panic reaction caused by the Greek crisis. The earlier than planned adoption of the new European Stability Mechanism, backed by the ECB and in accordance with more realistic governance rules, is a good thing; as is the commitment to replenishing the IMF’s coffers with a payment of 200 billion Euros by Christmas. Lastly, making Member States more accountable for their actions regarding debt and deficits is a step in the right direction, if the golden rule is clarified. But is it enough? The firepower of the European rescue funds is limited and the Member
States have confirmed their decision to reject Eurobonds. Lastly, the main elements of economic policy coordination (labour market, corporate tax, financial transaction tax, etc.), as referred to in the Sarkozy-Merkel letter to Van Rompuy, are not mentioned in the agreement of 9 December.
These issues remain to be clarified and stability will be obtained only when trust for a new growth will be regained. Work remains to be done in this direction by using this first agreement and the treaty has a lever to go further. As Mario Monti and Joschka Fischer so rightly point out, the scale of this agreement is “huge”, but “the debate on Eurobonds and work on the economic government are only just beginning”. Making our competitiveness efforts converge and promoting growth policies are the two topics everyone must undertake to develop in responsibility. This applies to both Germany – which cannot remain stuck on the “stability-only” motto– and our vote-seeking political leaders -who should concentrate on pushing ahead a true debate on Europe in France to avoid dangerous misunderstandings with Berlin.

Carole Ulmer, Confrontations Europe

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  (1) “Manifesto promoting solidarity and integration within the eurozone”, by Confrontations Europe, Bertelsmann Stiftung and the Astrid Foundation. www.confrontations.org

News Comment - Leveraging the December 9 deal