Brussels, 18/06/2010 (Agence Europe) - Jacques Delors' views on the financial crisis and the question of economic cooperation are non-conformist and give a new twist on events one might have read about elsewhere. In an interview with French newspaper Le Figaro, he talks about imbalances that he has been criticising for a good 15 years now, imbalances between the economic and monetary arms of EMU, and the absence of any coordination of member states' economic policies. He says this imbalance is why the Eurogroup didn't see the crisis coming and also didn't see the ballooning of public deficits or the massive levels of consumer debt. The slowness to take action, which is partly due to the behaviour of the German government, has increased the cost and fed into Euroscepticism. Jacques Delors makes the following recommendations on how to deal with these problems and look to the future:
1. A new way of restructuring debt. Jacques Delors would have dealt with the crisis differently. He says he would have argued for the extra 2% to 3% budget deficit used to respond to the crisis in each country to have been pooled together in a special long-term European amortisement fund based on healthy funding, and this could have been used to soften austerity programmes and better protect future spending and growth. A different way of restructuring debt - doing it collectively.
2. Monitoring the markets. Public debt grew exponentially because public money was used to bail out the banks, and it is now that very same financial system that is looking at the excess deficits and expressing concern about the impact that necessary belt-tightening will have on growth and employment! Governments get punished whichever way they turn. We shouldn't fear and cravenly submit to the markets, but neither should we ignore them. Instead, we should introduce some financial regulations to tackle the cause of the crisis - unlimited powers always get taken too far and risk bringing the entire financial system tumbling down. A number of rules are needed to protect freedom of initiative. It won't be easy but it has to be done. Europe has to introduce its own rules even if the EU's international partners fail to reach agreement.
3. The eurozone is different. The idea of forcing countries to inform partner countries about their national budget plans may lead to frank debate and useful ideas. This should start off within the eurozone, which has made more promises than the non-euro member states. The eurozone countries have made more ties that bind because they are linked up by the single currency. Trying to get all 27 countries at once to take action flies in the face of the qualitative differences between Economic and Monetary Union and the EU as a whole.
4. Economic coordination doesn't mean sharing a government. Governance is a meaningless but very fashionable term. Economic “government” is a French idea that I myself have always avoided because the Germans don't understand it - they see it as meaning polarisation of the European Central Bank. “Coordination”, however, is both necessary and possible. It could start by examining national budget plans during examination of member states' macroeconomic policies. We have to look at how to cut public deficits without nipping growth or potential growth in the bud. Then there's the question of burden-sharing. The 16 eurozone countries need to discuss this properly based on a European Commission report - that's the Commission's job.
5. The European Commission's job. To concerns about the Commission's democratic legitimacy, Jacques Delors responds that the Commission is not asked to make decisions. It is there to help governments. It has to work out what is in the European interest and to make proposals. To make sure everything runs smoothly. The better it does its work, the smoother the EU operates - fast, efficient and transparent. But governments want to sideline the Commission and this makes the system grind to a halt.... The French, Germans and English these days can't stand the Community method, so something new was invented - the Lisbon Treaty has added new jobs. A permanent president of the European Council might be a good thing, as long as the post-holders breathe new life into the Community method. But appointing a high representative for foreign policy before the EU comes up with a common foreign policy? That was a big mistake, a policy statement. Making empty policy statements that are not actually followed by policy is disastrous for the European ideal.
6. General indifference. People idealise the past. The European project gradually took shape amidst general indifference from the population... We should avoid prophesying doom and gloom if we want to mobilise public opinion. I am particularly concerned about extreme ideas voiced in the press... People have become so influenced by globalisation that leaders are tempted to flirt with nationalism, populism even. We must combat this way of thinking. (F.R./transl.fl)