It's not happening this week. There is a danger that this week's summit could be considered as a failure because it will not have launched the Eurobonds project. For the time being, any agreement on this point is impossible and heads of state and government might not even discuss the matter. In our previous publication, this column said that the level of ambition in the Junker-Tremonti project should be taken into account, as well as the obstacles and misgivings which it was obviously going to encounter, and that the divergences should not be over-dramatised. There is no room for improvisation with this kind of instrument! This week, we will have an in-principle agreement on the permanent crisis management mechanism and the mini-review of the Lisbon Treaty that this implies. Just a few weeks ago, how many commentators would not have believed this possible and would have highlighted the differences and likelihood of it being impossible to revise this treaty? This result is now a done deal but who is going to underline the progress of eurozone governance that this deal represents? It is now fashionable to emphasise the controversy about Eurobonds and the sharpness of the different opposing positions on this question. How many more years will be necessary for consistent progress in eurozone economic governance to be effectively evaluated and seen as the significant progress it represents in European construction?
An idea that will go far. The Juncker-Tremonti plan has its place in this context of progress, as the update of previous projects that have their origins in the intuition displayed by Jacques Delors. It is very ambitious and it is normal that it is subject to criticism, comments and suggestions. It has an almost institutional character, due to the role played by Jean-Claude Juncker, the president of the Eurogroup. In his presentation of the project, Mr Juncker himself (EUROPE 10272) explained that the formal debate had not yet begun and that the idea of Eurobonds “is not as stupid as it would appear”. He also said that it should be subject to a detailed discussion and highlighted the precedent of the European semester he had launched in 2005, which nobody took seriously, although it now exists. Mr Juncker concluded: “I think that the same fate awaits Eurobonds”. According to the co-signatory of the initiative, Giulio Tremonti, “this is an idea from afar and will go far”. He said that he was open to all contributions because it is an essentially political proposal. European Commissioner Olli Rehn described it as “intellectually attractive” and certain observers point out that President Barroso had already suggested something similar for funding investments of European interest, such as major transnational infrastructure projects.
The debate has begun. It would be absurd to expect any swift decisions, discussions are necessary. Mr Tremonti had wanted to reach an immediate position on one point: he does not agree that Eurobonds require, as indicated by the German minister Wolfgang Schäuble and subsequently confirmed by Angela Merkel, “significant reform” of the Treaty. Mr Tremonti considers that the Treaty would already allow for Eurobonds. Sources in Berlin assert that this very same Mr Schäuble has suggested that Eurobonds are not totally excluded from the realm of possibility: “Today, the German parliament would say no but if you allow us a number of months to work on the question…” I do not believe that Mr Juncker accused Ms Merkel of lacking a European spirit, as claimed by a German newspaper; her comments have obviously been exaggerated. The current debate is already a lively one, with a number of reminders and references being made: the Delors initiative (for whom the priority task of Eurobonds should not be one of covering budgetary deficits but rather, funding projects of the future); the project devised by the Bruegel Study Centre and its director, Jean Pisani-Ferry; the initiative by Mario Monti; etc.
Let's not forget that other ideas are flourishing. For example, Alberto Quadrio Curzio considers that part of the Eurobonds could be guaranteed by member states' gold reserves (those of Germany, Italy and France together are more than those held by the US), which would facilitate the mobilisation of a significant amount of liquidity requiring a guarantee of quality and would subsequently help reduce German efforts in this respect.
Despite the misgivings… It is sometimes pointed out that the financial and even the economic situation of the EU is in fact better than the one presented: its balance of trade is, overall, balanced, growth is currently picking up again (besides, excessive expansion would be unmanageable) and its currency is solid.
Obviously, Germany's reservations persist. Ms Merkel has pointed out that the different interest rates necessitate respect for the Stability Pact and that Eurobonds would conceal irregular budgetary behaviour by reducing pressure on member states to correct this behaviour. The debate is not an easy one but if the eurozone did behave as a genuine ensemble, with all member states respecting the rules, together with co-ordinated eurozone management and effective control of illegal immigration, an exit strategy to the crisis would become a reality. It is in this spirit that this week's summit should be held.
(F.R./transl.fl)