Rome, 02/05/2012 (Agence Europe) - Progressive political parties and economists in Europe believe that the only way of changing the way the European Union deals with the sovereign debt crisis is for the Socialist candidate, Francois Hollande, to win the second round of the French presidential elections. Alfred Gusenbauer, former Austrian Chancellor (2007-2008) said on Wednesday 2 May at a conference in Rome, organised by the European Progressive Study Foundation (FEPS) and the foundation Italianieuropei, that he was certain that the Left would win in France on Sunday, which could mark a turning point in Europe. He said Hollande would be able to get the German chancellor, Angela Merkel, to agree to add growth-stimulus measures to the fiscal compact signed by 25 member states and already ratified by Greece, Portugal and Slovenia. Gusenhauer pointed out that the support of German Social-Democrats was required if the fiscal compact is to be ratified in Germany itself. Diego López Garrido, former Spanish foreign secretary, said the French election was crucial.
Echoing the idea that Europe was at a turning point, the head of the S&D Group at the European Parliament, Hannes Swoboda of Austria, said that Hollande coming to power would represent a huge change not just for France and Germany, but also for Italy and Poland. He went on to describe how the EU could encourage economic growth by encouraging countries in surplus to make use of their spending power; temporarily pooling a portion of eurozone countries' sovereign debt in a redemption fund; taxing financial transactions and clamping down on tax evasion; and exempting some kinds of investment from the EU budget rules. On the latter point, the S&D is calling for changes to the two items of draft legislation to change the Stability and Growth Pact. Swoboda feared that the newly announced “Growth Summit” would do no more than agree to increase the EIB's capital.
Leading US economist Joseph Stiglitz says no market economy ever got speedily out of debt using austerity-based approaches alone. He warns that the focus on austerity and structural reforms will not help the euro to function properly. He didn't reject the idea of structural reforms as such, but pointed out that they take time to take effect and can exacerbate the lack of demand in the economy. (MB/transl.fl)