Friday 24 January 2020

Europe needs a rebuild with people at its heart

Fine ideas like unity do not work without the support of those being united, and failure is not an option, writes Jody Corcoran

Jody Corcoran

Jody Corcoran

THE headlines put it this way: '10-day deadline to save the euro'. Michael Noonan had another take. "That's drama rather than reality," he said. So let us try to avoid drama.

What Olli Rehn, the economics commissioner, actually said was this: "We are now entering the critical period of 10 days to complete and conclude the crisis response of the European Union."

In a way, Rehn was right -- we are in a critical period -- but mostly he was wrong. All they will do in these 10 days is buy a little more time. The crisis response will not conclude this week or next, or for a while to come.

A truer measure of the time-scale involved came from Angela Merkel last Friday. "Resolving the sovereign debt crisis is a process, and this process will take years," she said.

For that, read more austerity, certainly, but also opportunity -- if our Government can rise to the occasion.

There comes a point when austerity is a self-defeating strategy. In Ireland, we are at that point. Europe is careering towards recession and unremitting austerity will only drive -- and keep -- it there.

Keep a close eye on Italy and, into the future, listen carefully to what they are saying in Poland.

The real question, all the while, remains unanswered: can the crisis be resolved?

It might be helpful to properly identify the nature of the crisis first. The real crisis is not what is immediately apparent, a fiscal crisis and sovereign debt crisis, critical though those issues have become.

To deal with the immediate crisis, Merkel, Sarkozy, the technocrats and others, will begin next week to establish a fiscal union and to impose budget oversight of the eurozone.

Enda Kenny will be there too. The niceties of the negotiations are where Merkel and Sarkozy differ. Mark my words, Enda: Sarkozy may yet turn out to be our friend.

The real crisis has to do with how to square a circle ever growing; how to span centuries of difference in terms not just of economics and politics, but also of history and culture, in fact, in almost every imaginable way.

European unity is a beautiful concept, a noble idea, which has brought with it many great benefits over the past 50 years, not least peace on a land mass that has been riven by war.

In these times, we should not, therefore, lightly dismiss the words of the finance minister of Poland. "Europe is in danger," he recently warned.

In September, analysts at a Swiss bank put it like this: "No modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war."

Failure is not an option then. But European unity remains a concept, an idea, which at its heart is flawed in a most obvious way: it has failed to bring the people with it.

Greece is not Ireland, they now say; Portugal is not Finland. And they are right, but not in how they intend. The economics, politics, history and the culture of these countries were never intended to be so crudely set about that the circle might be squared.

The common currency, too, intended to be a crowning glory, also turned out to be flawed. It must now be saved, the consequences of failure too serious, as you might save a magnificent building by going back to work on its crumbling foundation.

The manner in which they are going about it, though, is compounding the problem. The instrument chosen to square the circle -- austerity -- is being too crudely implemented.

Soon they will have to go back again to the founding ideal, the original concept, to build over and to, this time, take the people with them. It will be no easy task; scepticism abounds. They might be well advised to lose the sense of elitism which has attached.

More immediately, the process will also involve not just austerity, but the "collectivisation" of debt, something an increasingly isolated Germany must accept, through the issuance of what are called eurobonds.

The events of last week, significant though they were, will do no more than buy time to resolve these more immediate threats, the fiscal and sovereign debt crises.

In Brussels next week, the central demand of Germany will be met. If Europe is to survive, treaty change is inevitable, which should mean another referendum here in 2013. More immediately, the thought is that the ECB -- or the IMF, with ECB funds -- will, in sequence, flood the market, to drive down interest rates and buy time for Europe to fix its problems.

The approach so far has been slow, cautious, and that will not change. We are dealing with politicians.

The crisis has already taken down several leaders, in Greece, Italy, Spain, Portugal and Ireland. There will be elections in Germany and France next year. It could take down Merkel and Sarkozy too.

In their discussions in Brussels, they should not forget that Europe is on the verge of what would be a crippling recession, perhaps as the ESRI here warned last week, a Great Depression. Italy, also, is still in real trouble from which it may not escape.

Merkel assumes that enforced greater discipline and centralised intervention in national budgets is the way to go, as though the periphery was the core and north was south. She needs to modulate her approach.

In Poland, the president has given his blessing to her push. He did so days after an extraordinary appeal by his foreign minister to Germany to step in -- the only country capable of doing so -- to save the euro and avert "a crisis of apocalyptic proportions".

As Micheal Martin has said, the history of relations between Poland and Germany is very dark; so it is impossible not to be struck by the foreign minister's statement: "I fear German power less than I am beginning to fear German inactivity."

In his speech last week, Sarkozy talked about the need for "plus de politique" in Europe, which, literally, means "more politics". Do not despair. Politics may yet save the day.

What Sarkozy really means is something more far-reaching. He means "more political control" over the decisions that European policy-makers will take to save the euro.

He is saying that elected national governments must have the final word on how Europe runs its affairs.

Sarkozy, of course, may be playing to his own electorate. He faces their judgement in April.

In this sense, though, he is challenging the notion, which is espoused by Germany, that "more Europe" is essential to overcome the crisis.

Let us turn again to Merkel. Germany did not wish to dominate Europe. "That is far-fetched," she said. "Germany and European unity are two sides of the same coin. That is something we will never forget."

Nor should we. Ever forget.

But we should also keep an open mind and, in time, embrace the change which is imminent. Ireland's future is in Europe. An exciting opportunity now exists to reshape that future.

Sunday Independent

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