A few secret breaches. The aim of the project was quite clear - “the experts' seminar” arranged and headed by Jacques Delors and Etienne Davignon on Monday in Brussels on the theme of “the euro, investors and governance” was not open to journalists. Why not? In order to allow participants to put their views across free from the risk of immediately finding their positions splashed across the newspapers. In this seminar they could feel free to distance themselves from official positions if necessary. Therefore, there were no holds barred in the debates between several leaders directly responsible for responding to and managing the new situation in Europe: Jean-Claude Trichet, Mario Draghi, Michel Barnier, Didier Reynders, Mario Monti, Peter Bofinger and many others… Nonetheless, everyone knows what usually happens - leaks occur and some of the protagonists refuse to confirm what they have said. It therefore falls on us to play our role and inform readers about some of the elements contained in the debate, whilst adding a number of our own personal considerations.
Reasons for confidence. In his conclusions on the day's debates and clarifications, Jacques Delors declared: “I'm leaving this meeting with more confidence than I had a year ago”. Viscount Davignon also drew conclusions on what he had heard and said that he had “the impression that something is actually happening”, which was a reason to be optimistic, despite the avalanche of criticism and gloomy forecasts created by the spirit of the age and dictated by the fashion for anti-European sentiment. The president of the European Council, Herman Van Rompuy, took part in the evening's homage to Tommaso Padoa-Schioppa (one of the fathers of the euro who recently passed away) and rejected the idea of there being a specific European crisis. He said that what existed was in fact a global crisis of which the EU is feeling the repercussions but the progress made by economic and monetary union had gone further than any of the forecasts. Another participant asserted that they should not talk (in the context of Greece, Ireland and Portugal) about a crisis of the euro but rather, of the euro in the context of the global crisis.
Progress in EMU's economic and social dimensions. In response to the reactions cited above, someone is going to say that this is an example of self-satisfaction experienced at the top level. That would be mistaken. The positive judgements do not refer to one or other single aspect but rather to the observation that the economic dimension contained in the project has finally and appropriately been taken into consideration. This aspect does not just cover the inevitable cuts in national budgets and the reforms required (such as pension reform) but all the different areas contained in this issue, including social demands and therefore confirmation of the social benefits acquired by member states - a concept that this column affirmed at the end of last month (“Euro rules help protect social benefits”, EUROPE 10347), which the president of the Eurogroup, Mr Junker, had always argued and a point on which Mr Trichet had also always insisted.
The president of the European Central Bank underlined that the source of the difficulties being encountered was located in the separation within EMU of monetary union (which consistently made progress) and economic union, which lagged behind. The latter covers the management of the national budgets, competitiveness and economic expansion. The two dimensions are intrinsically linked and countries that do not act on both fronts at the same time will never be able to make progress. Governments and, above all, national parliaments, must be aware of this but in my opinion this is still not entirely the case.
This position provoked a bit of a stir and several participants opposed the tendency to focus essentially on reducing national budget deficits. Some of the penalties planned for countries failing to meet the criteria were also criticised, particularly financial sanctions, which were considered as being impracticable and which could never be paid by the member states experiencing difficulties. This scepticism about the sanctions regime was also shared by Jean Pisani-Ferry, the director of the Bruegel think tank. In his opinion, it was essential not to reduce economic activity. Mr Trichet also pointed out that the EU's economic expansion was similar overall to that of the US, although the EU was lagging behind in areas related to professional mobility, and that in the area of economic and monetary union progress could also be made. In his opinion, eurobonds would represent a considerable step forward. Mr Draghi argued that they should go beyond the stage of controlling national budgets and complete the internal market, an objective that was also supported by many other participants.
Essential task. Michel Barnier highlighted the “internal market”. For countries compelled to cut public spending in order to reduce the deficit, maintaining sufficient rates of economic activity is significantly helped by a single market that operates effectively as a whole, not only in domains directly linked to EMU. Barnier argued that they had nothing to fear about the term “industrial policy” (which had for a long time been taboo in the EU). On the contrary, it was essential for them to talk about this aspect. Other aspects of the debate were more controversial and this column will discuss them tomorrow. (F.R./transl.fl)