Economic turmoil and European politics
Outside the European Parliament in Brussels may be seen the ‘Euro statue’. A solemn female holds aloft, triumphantly, a giant version of the currency’s emblem. The statue is kitsch, a kind of Western version of Soviet realist sculpture. In current circumstances, it is faintly embarrassing.
Politicians are in disarray over the Euro as European electorates send contradictory signals. In November 2011 the conservative party gained power in Spain, in May 2012 its nearest equivalent has been ejected in France. In April, 2012, the Dutch Liberal Government fell over a budget crisis, provoking the comment that if the Netherlands could not stay within the EU’s agreed deficit limit, which government could? Even in Germany, Mrs Merkel’s Christian Democrats have heavily lost an election in Germany most populous state. The contradictions can be simply explained. Governments, of whatever ideology, associated with the governance of the Euro are being punished - or delivered from their desperate struggles. The people however, find no such deliverance.
Worst of all is Greece, which has (one might think) suffered enough, yet whose continued membership of the Euro seems to depend on accepting a new bail-out under punitive conditions. Neither those who reluctantly accept this agreement, nor those who reject it, can form a governments, so Greece is currently rudderless, awaiting a caretaker administration, amidst fears that the run on its banks may become a panic.
After the French election, the pivotal Franco-German partnership is brought into question. Mr. Hollande will surely feel obliged to seek the renegotiation of the fiscal pact that Mrs Merkel refuses. He insists (and the case of Spain supports him) that a regime of unalloyed austerity will lead to intolerable social consequences. She, while not opposed to growth in itself, will not allow it to be financed through further borrowing where debt levels are already so high.
If austerity cannot politically be further imposed, and if deficit-financed stimulus is no answer, where do we go from here? The former Belgian Prime Minister Guy Verhofstadt has pointed out that the debt levels of both the USA and of Japan are far higher than those of the Eurozone. He identifies the true problem as the lack of a fully European economic governance, without which the problems of Greece, for example (with a mere 2% of the EU’s economy) become insurmountable.
This argument would be more convincing if Greece were the only country in difficulties. Yet it has proved true that a currency without coordinated governance has proved damagingly fragile. Especially if French and German polices diverge, the Euro’s sustainability depends on the acceptance of a more broadly shared political responsibility.
Meanwhile, expectations of an untroubled path to pan-European prosperity lie in ruins. However, those dreams were always trivial, since human purposes far transcend the pursuit of economic growth. Good economic management is crucial - but was seen by the EU’s founders as the means to more profound goals. Our aim can no longer be growth as such, but sustainability, personal and political responsibility, and a social justice rooted in solidarity.
Frank Turner SJ