“Immediate surge” is needed. Jacques Delors is right to sound a note of caution saying, in very recent interviews, that an immediate surge in cooperation is needed to prevent the euro from falling into the abyss. It is quite true that mechanisms for ensuring that European economic governance works correctly already exist or are being developed, but there is nothing to ensure that member states in difficulty are able to honour their commitments and carry out their projects. This concerns Greece in particular, but also those countries on which special efforts have been imposed such as Italy, Spain and partly France itself.
Urgent measures. In his interview with Le Soir in Brussels and Le Temps in Geneva, Jacques Delors states that the Franco-German document (commented in yesterday's column) is only a “new intergovernmental device intended to display a minimal amount of cooperation and to limit any transfer of sovereignty” from member states to the EU. He described the “other fashionable idea, of a eurozone Finance Ministry” as a “crazy gadget”. Noting the refusal of member states to transfer additional powers to the Union, he considers it essential that economic cooperation between member states should be enhanced by “pooling” national debts of eurozone countries “up to 60% of GDP”. He said that the states concerned would thus be covered by a partial guarantee of economic and monetary union (EMU) with the effect that interest rates would be automatically pulled downward. He added that “if this is not done, markets will continue to doubt”.
Furthermore, alongside the Financial Stability Fund which is to become permanent in 2013, Delors makes a forceful plea for the separate launch of eurobonds - but only to finance projects that bear promise for the future and not to cover debts. He goes on to explain: “Imagine what a great loan of €20 billion spent on innovation could provide by way of stimulation for the EU!”
Shared responsibility. By no means does Jacques Delors recommend easing controls, saying: “member states, simultaneously, must lift their last six objections to draft guidelines on economic governance”, the content of which has been logically toughened by the European Parliament to make sanctions automatic in the case of fiscal slippage. The responsibility, however, of well-known derivatives does not fall on the shoulders of only those countries concerned. Delors continues: “Who is guilty? Greece alone? No. It would be too simple. The responsibility lies with the finance ministers of the eurozone who have not called to account the authorities of Athens. (…) Why was Spain allowed to increase its private debt or Ireland to unduly favour its banks? At the same time, Community institutions beginning with the Commission have been weakened”.
It would not be a solution, Delors says with conviction, for Greece to opt out of the single currency, as “the widespread impoverishment resulting from a release from the single currency would exceed the benefits”. This idea is underlined still further in Jacques Delors' interview with the Italian paper La Repubblica on 26 August, in which he states his conviction that, if Greece were to return to a devalued national currency this would make the Greeks still poorer than any austerity plan for recovery.
Two essential measures. This second interview is largely devoted to general considerations, denouncing the current mood of gloom and the insufficiency of European leadership. Delors believes: “The spirit of the time is not good. National individualism dominates and there is no collective, united momentum. In Europe, there are not even four or five personalities with a vision of the future. The law is dictated by opinion polls, whilst, at the time when Helmut Kohl had made Germany agree to the euro, 60% of the Germans were opposed to giving up the Deutschmark”. He went on to speak of Valéry Giscard d'Estaing and Helmut Schmidt for their courage and their ability to overcome obstacles.
Jacques Delors highlights two measures, among others, that should be taken, saying there must be an: (a) obligation on banks to make a distinction between customer services and activity on the markets, as the latter is “always of a speculative nature”; and (b) introduction of the Tobin tax. He does not believe in the drain of capital towards tax havens saying that, in any case, this already exists. He sees this as a risk that is worth taking.
Jacques Delors reaffirms the principle whereby member states must act with rigour and the EU must act to ensure recovery. He reiterates the need for a European loan of €20 billion for investment in research, infrastructure and development.
These comments by Jacques Delors deserve reflection. Our musings on this will be continued tomorrow. (F.R./transl.jl)