Some progress in Italian recovery programme. Political support for genuine common management of the eurozone gets stronger every day and more and more positions are being taken. Volatility in the financial world persists and stock market values and ratings of public debt in eurozone countries continue to go up and down unabated. These factors do not in any way change the analysis developed in this column two days ago which stated that it was unthinkable that the eurozone should implode due to Italy's inability to define a credible budget recovery programme in two years. A compromise is expected in Rome over the next few days and it will have to convince the markets and put a halt to increasing speculation. On Tuesday evening, for the first time, the European Commission published a positive statement on developments in the Italian plan, expressing appreciation for a number of specific measures in the new version (see the following pages on the Commission statement). Updating of the draft continues in Italy at a parliamentary level and prospects appear to be improving.
The possible failure of Italy (the third biggest economic power in the zone) would compromise the euro edifice as a whole. Italian political forces haven't managed to agree due mainly to electoral reasons. Both the government and opposition are thinking of the next elections and each of them is doing their utmost to protect the interests of their respective electorates (real or presumed). One parliamentarian who is well known in Community circles, Emma Bonino, has proposed getting rid of half of all public subsidies to the political parties but she remains isolated in this view. The most radical measure of all, the reduction of the number of parliamentarians and senators, has in principle been retained in the austerity programme but this will involve amendments to the constitution and procedures that could go on for years (with parliamentarians themselves having a double vote). It will therefore have no impact at all on reducing public spending over the next two years, as sought by Brussels. The fight against tax evasion is also a crucial aspect but the effects of it will be slow and impossible to gauge over a two-year period. This is why the Commission message highlights more operational short-term measures.
Other countries on the right track. Italy's somersault would help the eurozone as a whole to recover because Spain, Portugal and Ireland are positively engaged in the right direction. Greece, on its own, does not compromise the existence of the euro. If Greece is unable to control the situation and if Greek society and the public are really impervious to the rules for the single currency, the country would obviously find itself on the sidelines of the eurozone, according to formulas to be drawn up.
European economic governance is progressing. I will return to the starting point of this column: the increasing number of appeals for the rescue and relaunch of the eurozone through strengthening the European dimension of how it operates and is managed. Our publication provides regular reports on this subject. It is significant that a firm position in favour of genuinely European economic governance has come from the German finance minister, Wolfgang Schäuble. While calling on countries which are experiencing difficulty, particularly Italy, to apply much-needed measures, “whatever the political cost”, he has also appealed for the gradual centralisation of the budgetary policies of the eurozone member countries. The minister does not rule out a genuine budgetary union, which would be gradually accomplished at the pace of democratic progress in a united Europe.
Link with other common policies to be set up. The German reference to democratic progress is important. It clearly states that common management of the euro and European economic governance cannot be achieved separately from the gradual consolidation of other common policies. It is also important that top-flight political figures who are active in the Community institutions, such as Guy Verhofstadt (or those that were active previously, such as Gerhard Schröder and Felipe Gonzalez) have backed a common declaration underlining the fact that if the EU is to be a world player, it must progress towards integration in the economic domain but also in areas covering energy, climate change, immigration, foreign and defence policies. Even a few British political figures have spoken out in support of this direction. The first step consists of Mr Van Rompuy concluding his operational proposal for economic governance. If everything is beginning to shift, it's a good sign.
(F.R./transl.fl)