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Europe, why the crisis continues

As the summer comes to an end the interminable talks about how to emerge from the crisis are starting again in Europe.

Old formulae, timidity and role playing explain why it continues to rage.

In the first category we can include the requests to relinquish budgetary seriousness to the benefit of growth revival through spending, which we now know will make matters worse, except if they are reserved for future investments - but this requires patience that very few have. The crisis has already led to the fall of eleven European governments and we can understand why people are impatient. But rich Europe has lived beyond its means and will not emerge from the present situation without putting its finances back into order.

However extremes, both on the left and the right, are feeding off these present difficulties putting pressure on struggling governments. Hence the Netherlands is in danger of falling under the thumb of populists from both sides, who rival each other in their excesses.

Timidity reveals itself in the half measures which secretly hope to reduce efforts to a minimum, while we wait for a hypothetical return of growth.

France has refused to include the golden rule in its constitution making specious legal arguments that can only be invented in politics. The main parties in the most important European democracies do basically agree however on the foundation of the policies to undertake, but electoral calendars challenge this agreement. It is a shame because if they were taken on board it would be possible to explain matters clearly and above all offer real hope to citizens in exchange for a temporary period of serious effort: by continuing reform Europe the euro could emerge strengthened from the crisis and take on a greater world role.

Role playing? The governments of Europe are arguing over the solutions to provide to the crisis knowing that they are condemned to agree and also that they always end up agreeing.

In this regard the Union's only federal institution, the European Central Bank, is implementing a particularly effective policy which its president has now officially recognised (Die Zeit - 29th August 2012). When governments accept the effort they have to make and take an extra step towards vital economic integraion it will come their aid decisively.

This was the case with Greece when governments launched the European Financial Stability Facility, and with Ireland and Portugal, which led to the creation of a true European Stability Mechanism (EMS).

In exchange for the Treaty on Budgetary Union (TSCG), the ECB launched a programme to refinance the banks with 1000 billion euros. The same will be done for Italy and Spain whose governments have been courageous enough to undertake ambitious, difficult reforms, the most important of these being that of the labour market.

The ECB will not let the speculators kill off Mr Monti and Mr Rajoy's courageous policies. Because this role playing tests the financial market's fragile nerves, but it also takes European integration forwards thereby providing a much quicker settlement to the crisis than any diplomatic conference could ever do.

It serves no purpose to speculate endlessly over the emergence of a country from the euro crisis or the failure of the single currency. An integral part of the strategic project to pacify the continent, it will not be challenged.

However the time is coming when governments will have to decide. 

To be forced either into continuing with slow integration, or to cut suffering short by making a qualitative leap towards Political Union, for which Angela Merkel has already expressed her support.  It is not about relinquishing sovereignty but of simply recovering plenitude by pooling our economic rules which is vital when we share the same currency.

Banking, budgetary and tomorrow, fiscal union are all naturally on the agenda that some governments, paralysed by their electoral calendars are hesitating to take on board. We must reassure them by recallig that inaction is the guarantee of failure and of popular rejection. We should be a little more audacious!

The choice is simple. We either continue like this, and the crisis will last longer until our slow efforts revive confidence in Europe and the euro once more. This time will surely come, but after serious, avoidable economic and social damage has been done. By accepting change, a qualitative leap that is restricted to the requirements of true economic governance of the euro and above all by completing necessary reform, we would save ourselves time and a great amount of sterile debate, which political France - after a year of electoral rivalry that has led to an even greater lack of leadership in Europe - seems to want to show it is still capable of.

We should attempt to make a forecast however: Europe will emerge strengthened from the crisis. It is up to its Member States to decide the pace they adopt.