Europe back on its feet

Within the next ten days the leaders of the European Union (EU) will be getting together to firm up the economic governance of the union. This summit will mark a continental watershed, since few summits before it have ever handled matters so important to the future. The first paradox is that, as has always happened in the EU, it has been brought about by a crisis – one as brutal as the sovereign debt crisis, which is casting a shadow over the rocky foundations of the monetary union based on the euro. Once again, the EU has made a virtue out of necessity.

At the summit, the agreement made a few days ago at the meeting of the 17 countries of the Eurogroup will have to be consolidated: in exchange for expanding and making more flexible the support mechanism for countries in trouble (effective provision of 440 billion euros that may be used directly to buy up the debt of countries hit hard by speculation without having to pay exorbitant interest rates), an economic policy called the Euro Pact is to be brought in. Firmed up by structural commitments, this policy proposes linking wages to productivity, greater control of deficits, increases in the retirement age, plans to recapitalise banks in difficulty, and progressive and yearly paydown of public debt.

Although softened a little by interventions, this policy implies an endorsement of the toughest clauses (hewing rigorously to wage restrictions, budgetary adjustments, financial restructuring, working conditions etc.) laid down by Angela Merkel, who is having great difficulties persuading her fellow Germans that they have to fork out more money to help the peripheral countries out from under the gathering economic storm clouds.

"Most reactionary document ever produced by the Commission"

The second paradox was reflected by the European Commission Vice President, Joaquin Almunia, who declared in Le Monde that the greatest difficulties in restructuring banks are to be found in the country that is demanding that its European partners set out on major reforms as quickly as possible.

The third paradox has to do with what’s in the box of economic governance. There is general agreement on the need for governance, but a thorough debate on how it will affect the citizens has been missing so far. The former president of the European Commission, Jacques Delors, who struggled hard to keep the European Union from remaining a mere monetary union, has described the annual growth pact presented by Durão Barroso as "the most reactionary document ever produced by the Commission". And the measures to reduce unemployment in Europe, which keeps 23 million people at home, have simply disappeared from the playing field. There is not even a rhetorical reference to employment as a priority area.

As far as can be told, ‘economic governance’ means a fresh stamp of the boot to the living conditions of most of the population. Let's see how they explain it from the summit.

Translated from the Spanish by Anton Baer