Agreement on major principles is not enough. The unanimity which is gradually forming on the basic objectives of the European Council on 28-29 June, while crucial, is not enough. Take the best known point, the twin-track approach between, on the one hand, budgetary discipline and the elimination of excessive deficits and, on the other, economic recovery. The principle of this twin-track approach has been accepted; each of the political forces, indeed, is boasting of having come up with it. However, translating it into reality is an altogether different matter. Jens Weidman, Head of the German Central Bank, the Bundesbank, and a member of the ECB General Council, has observed: “Saying that you back growth is like saying you support world peace”. Who could be against this objective of non-violence? Yet we can see what is happening in reality. The same goes for the above-mentioned twin-track approach: no one is against economic recovery. However, how it is to be achieved and the speed at which things must be done are the subjects of endless controversy.
Eloquent examples. Mario Monti has suggested that spending on productive investment, which generates tax revenue, should not be included in the calculation of a country's deficit. But defining this productive investment raises so many problems that no one knows where to begin. Another example: in Germany, a highly regionalised country, the administrative cost of the regions is very limited; in other member states, it amounts to billions and billions of euro. Why do they not learn the lessons of the German system? A third, and this time historic, example: those member states which, before the euro came into being, had to bear extremely high interest levels on their borrowing (Italy, Greece, and others) benefited from an extraordinary reduction when they joined the eurozone, since, at the start, the markets applied uniform interest rates to the euro. They would be in the same situation by absorbing their deficits. This is a clear example of the interaction between budget recovery and lower spending.
In a different area, the European Commission is insistent on the Council's entrusting it with negotiation with Switzerland on the regime for capital originating in an EU country deposited in Swiss banks. Mr Barroso highlights that the advantages for EU finances would be considerable. All the member states agree that the Commission conduct the negotiation - except Austria and Luxembourg. Here again is a difference that will have to be resolved.
Ms Merkel's anti-crisis suggestion. In a more general framework, a German weekly has published what it describes as the “Merkel plan for growth”, which seeks to facilitate and encourage economic growth in those eurozone countries which are currently in difficulty. The chancellor suggests that in these countries special economic areas be set up where tax breaks and simplified regulations would encourage investment; in these areas, work contracts would be simplified and easier to break.
This plan could be presented at the preliminary meeting in Rome to which Mario Monti has invited the German chancellor, the French president and a number of other Community figures. The meeting will take place, we know, after the French parliamentary elections and above all, after the new Greek elections. By that time, things will be clearer, and it will be possible to coordinate lines of action.
Deep influence on the very nature of the EU. It must never be lost from sight that action, which might appear to be technical or economic, will have a profound effect on the very nature of the EU and how it operates in future. A number of observers have made the point that the European organisation structure that worked for an EEC made up of six or ten countries is ill-adapted to a Europe of 27 disparate member states with no genuinely joint ambitions. This brings us back to the two-speed Europe, which this column has long considered unavoidable, not because of a desire to exclude any member state or states from future developments but because some member states, beginning with the United Kingdom and Hungary, do not share the objectives of integration that are implicit in the eurozone.
The structure and institutional operation of this future Europe do not have to be determined at the end of June. They will require time, difficult negotiation lies ahead and amendment of the treaties. However, the forthcoming decisions will be heavily influenced by this prospect. The European authorities with responsibility for the world of finance are also aware of this. Mario Draghi, President of the European Central Bank, has said: “Eurozone member governments must together and irreversibly define their vision of the economic and political construction which will sustain the single currency.” The summit at the end of June will no doubt be well aware of this. (FR/transl.rt)