fr en de

France and Germany for a true European Economic Governance

Learning the lessons of the 2010 crisis which nearly wiped out 60 years of European integration France and Germany almost caused a scandal as they suggested the establishment of a “competitiveness pact” to their partners – the aim of which is to accelerate the harmonisation of their economic, fiscal and social policies.

The two main economies in the Euro Area (48% of its wealth, 39% of the population) have been suspected of launching a solitary, intergovernmental measure that would divide the Union.

In fact they did it as part of a European structure, i.e. the Lisbon Treaty, by asking the President of the European Council – since the Commission had already made its proposals – to present a concerted plan in March. What could be more in line with the so called "méthode communautaire"!

The Euro is now the most effective federator in the European Union providing stability, increased wealth (between 1999 and 2009 : +41% of the GDP, +45% of the GDP/capita and at constant prices, +14% and 7.6%) and it is the guarantee of nearly 20 million jobs in Europe. It was a decisive factor in rising to the crisis. The 17 States in the Euro Area comprise 65% of the Union’s population and represent 75% of its GDP.

Every Member State, except for the UK, has committed with the Treaty to joining it sooner or later. The Euro is the financial engine driving European integration forwards with its Central Bank and its guarantee mechanism; this includes the European Financial Stabilisation Fund which has deflected the bankruptcy of two States in 2010.

And so it is normal that its leaders first want to lead the eurozone – although there is no doubt about their solidarity with regard to the others as demonstrated by the 320 billion euro distributed over the last seven years in aid to the poorest economies.

But do Europeans really have the determination and courage to defend their model and give it a chance to remain amongst the most developed economies in the world? Judging by the first reactions, we might question this.

Hearing the interim Belgian Prime Minister say that indexing salaries is a national issue not to be thought of on a European level is a pathetic absurdity. What if the Belgian debt together with its ongoing political crisis ended up by endangering the euro?

When we see that some worry about mentioning subjects such as vital fiscal harmonisation, the necessary convergence of the retirement regimes, the wise management of public finances on a European level one might think they are afraid of facing public opinion to whom they have decided not to tell the entire truth.

What if the markets still doubt their management skills? Will they be able to continue with the euro without investing what it takes to make it stronger?

The seriousness of these issues for Europe demands “creative endeavour that is equal to the dangers that loom.” It demands audacity.

Finally criticising Germany and France for taking the initiative indicates that we have forgotten Robert Schuman’s lesson – the latter indicated on 9th May 1950 that “any action taken would firstly affect France and Germany”. By showing the example France and Germany risk shocking their partners. But if they do not act they will be putting the euro in danger. And if they are alone in showing the example by committing to convergence – it is already good news for the euro and as always – since the start of European integration, it is good news for Europe!