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July 19, 2011 |  4 comments |  Print | E-Mail Your Opinion  

EU Crisis: Return to the Language of Truth

Hans F. Bellstedt: Joschka Fischer’s call for “greater European political unification” will not help solve the EU’s ongoing debt crisis. The only way to regain the public’s trust and restore financial markets is strict fiscal austerity as a prerequisite for future sustainable growth.

When you stroll through the streets and squares of Brussels and sip your petit café with the people working inside Berlaymont, you get the impression that the former self-assuredness of some EU officials is giving way to a more reflective and self-critical attitude. “Maybe the dramatic crisis of the EU could have been avoided,” these people are starting to think, “if we had not pushed ahead with European integration at any price”. In light of this remarkable change, former German Foreign Minister Joschka Fischer’s recent proposals on how to solve the Euro crisis seem to be pretty much out of touch with both political reality and the street.

Fischer argues that “the euro – and with it the EU as a whole – will not survive without greater European political unification”. Excuse us? The political integration within the EU has reached a level where it is almost impossible for Berlin, Paris or Rome to act unilaterally. National heads of government and their ministers spend endless hours in council meetings with their EU peers, in windowless conference rooms, with unsatisfactory outcomes most of the time. Between 70 and 80 percent of our legislation is already being shaped in Brussels, with considerable impact: the European banking system, for example, will be regulated by Internal Market and Services Commissioner Michel Barnier, or it will not be efficiently regulated at all. The EU has achieved an influence on our daily lives which many people (and businesses) find hard to digest.

Against this background, Mr. Fischer’s call for an even closer political union largely neglects the fact that EU citizens are simply not ready for such a leap. Look at the nationalist True Finns in Finland, the Danes closing their borders, the new rise of the right-wing FPÖ in Austria or the popularity of Marine Le Pen in France. But even in Germany a growing EU-skepticism is taking root in at least two parties, namely the Christian Social Union and, to some extent, the Free Democrats – both members of Angela Merkel’s governing coalition. In such a volatile environment, calling for more political integration while assuming that “the rich economies – first and foremost Germany – will have to pay for the way out” of the current European dilemma carries the risk of nothing less than a public upheaval. We wonder how Mr. Fischer can accept such a scenario.

In our eyes, the urgent task of EU leaders is not further integration but smarter explanation. Rather than forcing EU citizens into an ever closer union, European Commission President Barroso and his colleagues, Herman van Rompuy and Jean-Claude Juncker along with the 27 heads of government, will have to find new ways of reestablishing trust and understanding between the political elites, on one hand, and hundreds of millions of EU citizens on the other. A crucial element of this strategy will be to return to the language of truth: Yes, Greece is bankrupt. Yes, we never should have allowed Greece to enter the eurozone. Yes, the Greek dept has to be restructured as soon as possible with private banks assuming their part of the burden. Yes, the European Central Bank committed an unforgivable mistake in taking Greek and Portuguese bonds on its own books. Yes, it remains unfeasible to synchronize fiscal policies in the northern part of the EU with those in the Mediterranean. And no, the debt crisis in several EU member states has neither been caused by “the speculation” nor by “the Anglo-Saxon rating agencies.” It has mainly been caused by record-low interest rates in the eurozone leading to excessive consumer spending in all PIGS states.

The only way to reestablish public trust in the EU and calm down financial markets will be strict fiscal austerity as a prerequisite for future sustainable growth. Meanwhile those who call for “more Europe” may order a strong coffee and think it over again.

Hans Bellstedt, owner of HBPA GmbH, a consultancy, teaches Public Affairs at the Technical University (TU) of Berlin.

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Unregistered User

July 19, 2011

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Nice to see some common sense on this subject. A well written article that explains why some of the political elite need to slow down and start listening to the common man and woman. Some times they know a lot more about what is actually happening in an economy than the people who don't really see what is happening on the street.
 
Amrit Deecke Naresh

July 19, 2011

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I agree, this article makes a very timely argument against the rhetoric of "unity" that fails to take into account the reality on the street. But I also think that greater European unity, mainly in the form of economic integration, could have helped prevent some of the problems the eurozone currently faces. A stronger centralized economic system, with common tax and budget policies for all eurozone states, might have lessened the debt burden the PIGS countries have built up. A more integrated economic system could also have helped Europe react more quickly to the crisis in Greece. Instead, as individual states like Germany and France squabbled over the best course of action, Greece slid deeper and deeper into debt.

The EU has done a remarkable job of political integration, but economic unity lags far behind. Despite sharing a common currency, eurozone countries never consolidated their economic policies. Some thrived, while others ran wild. This lack of coordination, I think, is one of the reasons behind the dire crisis Europe faces today.
 
Unregistered User

July 22, 2011

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I think proposed by Mr. Fischer steps contain some reality. Yes, Europe will be involved into the new wave of crisis if Greece becomes bankrupt, following hard days to EU. But with the clever governance this shouldn't be so painful. Coordination here is one of main things in common ruling - they should find the right way out only together.
 
Unregistered User

July 24, 2011

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I agreee with Amrit and Igor that a better coordination might help to avoid future crises. But coordination does not necessarily mean closer integration. Integration will only work on the grounds of shared views and values in fiscal and economic policies. However, in this respect countries like Germany, Greece or Portugal seem further away from each other than, say, California and Massachusetts...
 

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