While the political crisis deepens in Italy and in Spain, France and Germany are still demonstrably incapable of formulating precise and ambitious proposals for reforming Europe. All that is required however is for these four countries, who alone account for three quarters of the GDP and the population of the Euro zone, to agree on a common approach and the way to reform would be open. How can we explain such extraordinary inertia and why is it so serious? In France, there is a tendency to lay the blame on other people. The official view is that our young and dynamic president has made innovative proposals for the reform of the Euro zone, its budget and its Parliament. But the unfortunate thing is that our neighbours are incapable of taking these into account and responding with
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While the political crisis deepens in Italy and in Spain, France and Germany are still demonstrably incapable of formulating precise and ambitious proposals for reforming Europe. All that is required however is for these four countries, who alone account for three quarters of the GDP and the population of the Euro zone, to agree on a common approach and the way to reform would be open. How can we explain such extraordinary inertia and why is it so serious?
In France, there is a tendency to lay the blame on other people. The official view is that our young and dynamic president has made innovative proposals for the reform of the Euro zone, its budget and its Parliament. But the unfortunate thing is that our neighbours are incapable of taking these into account and responding with the same Gallic audacity!
The problem with this superficial theory is that these notorious French proposals are quite simply non-existent. Nobody is capable of writing three simple sentences explaining which common taxes will fund this budget, who will be the members of the Euro zone Assembly who will exercise this new fiscal sovereignty, etc. If you want to make sure, just ask your favourite pro-Macron friend, or, if you do not have any – nobody is perfect – write to your favourite newspapers !
It is almost as if the revolutionaries in 1789, instead of setting up a National Assembly enabling all privileges to be abolished immediately and a new fiscal system to be set up, had only announced that it would be a good idea to pause to reflect on the setting up of a commission to consider a long-term plan to save the Ancien Régime. It is the difference between doing something and empty rhetoric.
The truth is that the French proposals are so vague that they are open to almost any interpretation. This is precisely the problem: all the nationalist and anti-European discourses can easily oppose them by putting what they want in it. Today, it is easy to criticize the reluctance of Angela Merkel and the fact is that her reply to the ‘French proposals’ is more than hesitant. The latest version is that she would apparently agree to an investment budget for the Euro zone on condition, however, that it be ridiculously small (less that 1% of the GDP of the zone.)
Obviously, in all this there is no mention of the common taxation system capable of financing it (so much so that there is a strong risk of finding ourselves recycling investments which have already been made or announced, with considerable ‘creative accounting’, as with the Juncker plan).
And of course, there is no mention of the all-important democratisation of the Euro zone. The single proposal made by Merkel is to rename the European Stability Mechanism which would become the ‘European Monetary Fund’; this expresses fairly clearly the hyper-conservative vision. It is a question of applying the IMF model to the government of Europe, in other words, government behind closed doors, piloted by the Ministers of Finance and the technostructure. This is the antithesis of the public, democratic, parliamentary and contradictory discussion which should always have the last word. It is extremely sad to see that Merkel and Germany have ended up here, thirty years after the end of Communism and the certainties of its bureaucratic closed-doors procedures.
But it is too easy to criticise Merkel’s reluctance. It is time that the French media understand that she is only responding to Macron’s timidity. The fact is they share the same conservatism. Ultimately, these two leaders do not wish to make any fundamental changes in present-day Europe because they suffer from the same form of blindness. Both consider that their two countries are doing quite well and they are in no way responsible for the ups and downs of Southern Europe.
By so doing, they run the risk of undermining the whole endeavour. After having humiliated Greece in 2015, whose ‘extreme left’ government was perhaps not perfect, but did at least have the virtue of promoting values of solidarity towards the poorest and the migrants, France and Germany now find themselves in 2018 with the extreme right in power in Italy. The only thing that holds this government together is hostility to, and active pursuit of, foreigners, all of which has been enabled by the effect of European rulings.
The difficulty now is how to get out of this impasse? The dilemma is that a fair number of the German and North European leaders have for years explained to their voters that all the problems in Europe were caused by the lazy people in the South. These populations were said to be jealous of their money and all that was required was to get them to start working and exporting like the Germans or the Dutch and all would be well.
From the economic point of view, these speeches are as ridiculous as those made by the Front National in France or the League in Italy (since no country in the world could ever absorb a German trade surplus generalised at the level of the Euro zone). The fact remains that this fear of the transfer union – (or as the Germans say ‘Transferunion’) – prevents any debate.
To overcome this problem, one would probably need to guarantee that the future budget of the Euro zone, funded by a common corporate income tax on the profits of companies and on the highest incomes and property holders, voted by a genuinely democratic Assembly, should benefit each country in proportion to its fiscal contribution (with net transfers limited to 0.1% or 0.5% of GDP).
This intrinsically national vision of solidarity is not satisfactory, but ultimately this is not the most important aspect: the aim is primarily to enable a European public power to tax the most powerful economic actors at least as much as the poorest, in order to invest in the future and to reduce inequality within each country. Let’s discuss Europe at last and forge ahead!