Germany and France made it possible to hold a European Council that had purpose on 19th and 20th March.
As always they swept away past disputes and focused on the essential. Decisions were taken and these were much more ambitious than had previously been planned. They were carefully prepared during a Franco-German Council of Ministers on 12th March and in a joint letter addressed on 16th to the Presidency of the Union and the Commission.
The two leading economies in the euro area demonstrated their impatience with regard to the overly diplomatic approach adopted to European affairs. In no uncertain terms they asserted their views about the G20 meeting in London on 2nd April and more generally how the Union should act during the crisis. On either side of the Rhine we share the same idea of the economy, ie it should be free but regulated; France and Germany have demanded concrete results of the G20. They want to build on a world financial architecture that has real rules, the application of which is monitored by the IMF. The target of this are the hedge funds, tax havens as well as all other eccentricities invented over the last few years, which nearly wiped out the world financial system. These two countries demand the registration, the supervision of all financial players and a system to punish them in the event of any abuse. They want the accounting rules to be reviewed as they already vainly requested in the past.
The demands also target the Commission and reprimand the other Member States. The Union must shape up and the Commission is asked to prepare the implementation of the Larosière Report for the month of June in view of true European supervision and new regulation. Hence the Parliament will have to adopt rules for the ratings agencies, for the solvability of insurance companies, for banks’ own funds, for cross-border payments and for electronic currency before the end of this term in office.
These are clear guidelines that may promote the return of confidence and stabilize the financial system.
In addition to this the two States promise – finally – to adopt true coordination of their economic policies by rehabilitating the Franco-German Economic and Financial Council. They have re-iterated their attachment to the adoption of the Lisbon Treaty before the end of this year and threaten to “apply all the measures in force (…) as long as (…) it is not adopted.” Let those who lag behind be warned: they will no longer have a European Commissioner! As for enlargement: it will be refused as long as the new institutions have not been established.
However the message of solidarity addressed to the Member States who find themselves in difficulty and to those who want to join the euro area is unambiguous: the Union is open and generous but it is built on rules- the first one being the Stability and Growth Pact.
They are still the common law which has to be respected. It is time to take up the tiller to guide a Europe which is increasingly bogged down in day to day management whilst the crisis rages around us. The pathetic show of a Union unable to agree on a 5 billion euro programme must not happen again.
It is vital to give sense to the European policies that have been tossed about by Member States who too often consider the Union as a free for all and the Commission which lacks imagination and leadership
In the months to come the Union will be playing for its long term status and role in the world. It must rise to the challenge. These initial Franco-German guidelines have come at a good time. They must be followed by others, more ambitious ideas.
In this way the unity of Europe could take a great step forwards Amongst the opponents, the resigned and the impotent the only guiding spirit in Europe remains the Franco-German partnership.