Sunday 15. December 2019
#154 - November 2012

 

A two-speed Europe

 

 

The conclusions of the last European Council of 18 –19 October show that the announced European measures for growth and employment are only being implemented very slowly.

 

The mood ahead of the EU summit of 18–19 October was mostly serene. Although the situation in Greece and Cyprus was and still remains uncertain, and the morale of the population in Portugal and Spain is particularly low, observers in Brussels had been expecting a rather harmonious summit. The plan, sprung as a surprise a few days earlier by the German Finance Minister, for the rapid formation of a fiscal union in the Eurozone did nothing to change this.

 

The fact that it still turned out differently may have been due to the start of election campaigning in Germany. What was also apparent, however, was an increasingly obvious split in the European Union between the 17 Eurozone countries and the 10 countries that are not (or not yet) participating in monetary union. The difficulty in maintaining a two-speed Europe in a common institutional framework will possibly be a greater challenge for the European Union in the next decade than the differences within the Eurozone.

 

At the June summit, far-reaching decisions were taken on a growth package, especially on the creation of a banking union. The announcement that the European Stability Mechanism (ESM) would intervene directly in bank bailouts and thus relieve national budgets had led to a noticeable easing of tension in the financial markets. This trend was further strengthened in early September when the European Central Bank stated that it wanted to make unlimited purchases of commercially available government bonds, when the Dutch elected a pro-European majority to parliament, and when the German Federal Constitutional Court rejected appeals raised against the ratification of the ESM and the Fiscal Pact. Interest rates on government bonds from Spain and Italy have dropped significantly since then, and Ireland has succeeded, for the first time since its European rescue package, in once again providing the capital markets with fresh money. The main European stock indexes have risen by 20% since June. The euro, in turn, has gained 5 cents against the dollar since the summer.

 

The Conclusions of the last European Council of 18–19 October, however, show that the European measures for growth and employment, announced so resolutely last summer, are only being implemented very slowly. Whether in deepening the Single Market, enhancing the competitiveness of industry, developing a tax policy for growth or boosting employment and social inclusion, the outstanding issues that are still unresolved continue to predominate. By comparison, the achievements reached so far – e.g. with the capital increase of the European Investment Bank and European project loans – are somewhat modest exceptions. Furthermore, the outcome of negotiations on a new EU multiannual financial framework 2014–2020, for which a special meeting of the European Council was scheduled for late November, is still completely open.

 

However, what took up most time in the October summit discussions was the fixing of the timetable for the creation of a European Banking Authority and answering questions arising from it being set up at the ECB. Many commentators believe that the supervision of the 6,000 European banks will probably only become fully operational – if operational at all – after the elections in Germany in autumn 2013. There has also been no precise clarification of how the inevitable conflicts of interest within the European Central Bank are going to be dealt with. What would happen when an ECB interest rate increase, necessary for monetary policy, puts the banking world – which the same institution is supervising – under pressure? It is also uncertain how EU Member States which do not belong to the Eurozone and are therefore not represented in the ECB can actually play a part in the supervision mechanism.

 

It is precisely on this issue that the abovementioned threat of splitting the EU into two camps clearly emerges. This split will dominate the future development of the EU. By highlighting the common and unifying heritage of the vast majority of European citizens rooted in the Christian image of humanity and emphasising their similar lifestyles, the Church in Europe can help ensure that the centrifugal forces will not gain the upper hand here.

 

The Church can also help to ensure that, amid all the introspection, Europe’s responsibilities on the world stage will not drop out of sight. It is an immense pity that not only the award of the Nobel Peace Prize to the European Union but also the civil war in Syria and the disturbing developments in the north of Mali only get a mention at the very end of the Conclusions of the October Summit under the heading “Other Items”.

 

Stefan Lunte

COMECE

 

Translated from the original text in German

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