The last EU leaders summit for 2012 proved to be as uneventful as all those which preceded it in the last three years. Europe is suffering from a leadership crisis that threatens the continuation of an economic and monetary union that started off by being a dream but is now turning into something more like a nightmare.
EU leaders’ short-term perspective is the most important stumbling block to reform- John Cassar White
The two-day EU summit meeting in Brussels last month had a very clear agenda: transforming the eurozone from a simple currency union into something resembling a centralised fiscal and economic bloc. By the end of the summit nothing much had been achieved.
Josè Manuel Barroso, the European Commission President, resorted to the usual happy talk when he said: “No door was closed on steps towards deeper integration, and we will keep moving forward.”
Yet only a few weeks ago Barroso published an ambitious 51-page blueprint that predicted as early as 2013 the start of more centralisation in the EU in economic and fiscal governance.
Barroso’s plan included Brussels having control over national economic programmes, as well as a centralised Budget that would eventually have the kind of taxing, spending and borrowing power now reserved for national programmes.
Herman Van Rompuy, the European Council President, had similar plans to those of Barroso, but his two-year plan for economic and fiscal reforms is likely to be shelved for the foreseeable future. No wonder the technocrats milling around the corridors of power in Brussels expressed different views about the success of this latest summit. One of them is quoted by a Financial Times correspondent as commenting on the EU leaders: “They are underperforming again.”
We were, of course, fed the usual serving of public relations waffle. We were told that our brave leaders had again been deprived of their well-deserved sleep when they met in another notorious all-night session to agree on the final communiqué that brings such summits to an end. Plans to put some flesh into a new eurozone Budget were shelved. The action plan to start implementing the measures needed to give the euro some meaningful governance structures was similarly archived.
Angela Merkel will be facing a tough electoral challenge in September, so it comes as no surprise that she was one of the leaders who ‘applied the brakes’ on reforms. She said: “We have achieved some things, but just as before, we have a tough time ahead.” The lady has become so reliable to understate the obvious.
The only achievement of this summit was the setting up of a banking union – a Frankfurt-based common supervisor for the region’s largest or most important financial institutions. For Malta the good news is that our two major banks will now be directly supervised by the ECB. This should ensure that scrutiny of our domestic banking system is even more rigorous. Hopefully this will keep complacency – one of our major weaknesses – at bay.
French President François Hollande, who backs deeper integration, was perhaps the most honest and realistic when he said: “There is a political issue: there are a number of countries that do not want to transfer any further competencies to the EU. There are even a number of countries who would like to step back from the competencies already transferred to the EU.”
Ironically, the gradualist approach adopted by EU leaders to patch the cracks that appeared in the eurozone political, fiscal and economic governance has muted the sense of urgency that money markets had initially instilled in the political debate on much-needed reform in the eurozone. This is unfortunate as major changes often take place only when those involved in a particular crisis have their backs against the wall. The short-term perspective of the current bunch of EU leaders is the single most import-ant stumbling block to genuine reform that is so badly needed to save the eurozone.
In 2013 we will once again experience serious tensions in the eurozone. Many analysts are already predicting that the robust eurozone Budget that could breathe some life into the sluggish EU economies may never come. One thing is sure: we will continue to hear happy talk from our political leaders who will keep telling us that they are in control and that we just need to trust them.
One can just hope for a new crop of EU leaders with genuine ambitions to underpin the common currency with good basic fiscal and economic structures that ensure good governance.
johncassarwhite@yahoo.com