“The leaders are spending a great deal of their time at their summits discussing how to get out of the mess they got into at the previous summit,” whispers one player high in the political echelons of the EU.

The inanity of the repetitive and circular conversations about Greece, Portugal or on the size of the bailout fund confirmed yesterday just how difficult it is to extract oneself from the mess. The politicians have been stuck in it at least since Merkel and Sarkozy released from its bottle the goblin of state bankruptcy (Deauville, October 19, 2010), lurking in the write-off for private creditors (i.e., the decline in the value of their bonds). The meeting did make two great contributions to the saga of recurring stubbornness: giving the green light to a sham “Fiscal Treaty”and endorsing a plan for economic growth that is not a plan. It’s a joke.

Or does it just look like one?

Let's suppose the new fiscal treaty is necessary to ensure the discipline of eurozone members and to design, or open the door to, the resulting “compensations” in favour of growth. Which is a lot to assume: the European Parliament has expressed “its doubts about the necessity” for the agreement (Resolution of January 18), and Wolfgang Munchau (in Monday’s Financial Times) endorses and amplifies those doubts: “The Treaty is unnecessary,” because its provisions are “either in existing treaties or in legislation” and because the excessive restrictions of those provisions “will encourage” recessionary policies.

Byzantine tweaks

Let's suppose the doubters are wrong and that the Treaty, with its pompous title “for Stability, Coordination and Governance in the Economic and Monetary Union”, is worth something. Well, the text develops only the idea of “stability”, of budgetary discipline. The rest of the title is not mentioned in the actual text.

It has to be repeated ad nauseam that only Article 9 (of the 16) mandates “promoting economic growth.” And it requires that the signatories “take the actions and measures necessary” for that growth. But it specifies none. There is nothing that is actually obligatory. There are no fines for those who don’t take those actions and measures for growth. There are no threats to haul off to the Court of Luxembourg those who fall by the wayside.

And yet, in contrast to all that, the Treaty sets out very precisely the sanctions to be meted out to all who fail to follow the provisions for cutting deficits. In this asymmetry lies the joke: the package is being sold as a tool to drive the two poles of economic policy, yet only develops one.

But there's more. The fifth version of the text, the one that made it to the conference, is even more convoluted than the last. The [new] tweaks are essential not because they are Byzantine, but because their very Byzantineness reveals how the planners and drafters of the text have fallen ill: fighting illusory windmills – i.e., the most obscure routes for incurring deficits and circumventing the sanctions – like mad Don Quixotes.

For the good people who have not fallen ill, it is enough to point out that one of the obsessions of these tweaks is to empower any government to pursue a defaulting partner, if the Commission itself refrains from doing so.

Snake oil

And so the text probably is necessary, dear Wolfgang – but it will be useless. Because all the historical actions in this area that have marginalised or minimised the power of institutions – from the Lisbon agenda of 2000, to the revolts in Paris and Berlin in order to evade sanctions from Brussels for failing to hew to the Stability Pact in 2003 – have led to the place that nobody wants to think about: irrelevance.

The other false “snake oil” is the “Declaration” on reviving economic growth. The issue has worried the Franco-German couple – the last to find out that if GDP falls it will not be enough even to service the debts – since their bilateral get-together on January 9, the first time they proposed combining the sackcloth with vitamin shots.

The Berlin-Paris axis, and the Commission and Council have deployed two techniques of proven inefficiency for reviving economic growth. One is to shake out the drawers (as with the Lisbon Agenda) for a few beautiful ideas and scrapped plans: youth employment, and financing for SMEs (Small and Medium Enterprises).

The other is to rake over the Community budget and reallocate items. The money left over, i.e. that has neither been spent nor returned to the governments, is chump change – about 30 million euros. And reorganising the 82 billion euros of the structural and cohesion funds not yet allocated for the two years (2012 and 2013) still remaining in the current Financial Perspectives septennial (i.e., in the 2007-2013 budget cycle) may be premature. In any case, it’s misleading, since those funds are already geared towards growth: roads, schools, water treatment plants. And following the “Luxembourg employment strategy” of 1997, not one cent is to be spent on projects that do not create jobs.

There is, therefore, not a single new euro. Just juggling games.