The crisis rhetoric based on the austerity crisis has cooled off. This does not mean that the austerity problem is gone, or that it has somehow magically solved Europe’s problems with government deficits. On the contrary, the austerity campaign of 2012 has wiped out any prospect of growth in the euro zone, and possibly in the EU as a whole, for the next couple of years. There are still austerity plans unfolding in primarily Greece, Portugal and Spain but other countries may join if their budgets do not improve over the remainder of this year.
But the fact that the media frenzy about austerity is gone is taken as a sign by some of Europe’s political leaders that it is time to focus on something new and fresh. Interestingly, as soon as political leaders in Europe start calling for more visionary leadership, the Brussels-based Eurocrats who led the authoritarian austerity assault on some member states of the EU are suddenly going AWOL.
The European Commission on Wednesday (12 June) came under pressure to be a bold policy-maker, as a meeting of EU leaders later this month shapes up to be another damp squib.
The EU Commission and the leaders of the European Central Bank surely do not feel that they are not leading. They are leading the charge against deficits. They are leading attacks of fiscal firebombing on countries whose economies are already in deep trouble, but that connection is lost on the likes of Barrosso, van Rompuy and Rehn. They think they have been showing strong leadership during the austerity crisis. (That the end result is worse than the situation they tried to solve is another matter.)
The real problem here is of course that the EU Commission has been spending so much of its political efforts on shoving tax hikes and spending cuts down the throats of Greek, Spanish, Portuguese, Italian and other taxpayers that they simply do not grasp the notion of positive, visionary political leadership.
This might actually turn into an interesting situation. The austerity crisis is only dormant, not solved, and will resurface again toward the end of this year. In the meantime there is a policy vacuum that some European politicians want to fill with more than political machine guns. They want to build something constructive for the future.
It is of course not possible to do so within the structure of the European Union. Big government growing bigger is not the way forward. But at least it is a bit amusing to see how the second tier of Europe’s political leadership – the members of the European Parliament – struggle to find a way to Europe’s future in roadless land.
Back to the EU Observer story:
Deputies in the European Parliament urged the commission to table far-reaching proposals on banking union – a three-pillared plan seen as key to establishing and maintaining a stable eurozone. “Exactly the same mistakes are happening again,” said Belgian Liberal MEP Guy Verhofstadt about member states getting complacent. Dutch Liberal MEP Marietje Schaake said “lack of leadership” meant structural problems in the banking sector “remain unresolved.”
For all Americans: as we know, “to table” something means in English to defer it. However, when the Brits use their awkward version of our language the verb “to table” means putting something right on top of the agenda.
Now, then… what vision do the members of the European Parliament have for the future of the EU? What bold, ambitious agenda are they looking for?
Leaders first agreed the need for a banking union a year ago as a way of breaking a link that sees failing banks burden governments with more debt. While plans for a single supervisor to oversee eurozone banks is underway, a recent Franco-German paper all but bins the other pillars of the bank union. It makes vague reference to a weak-sounding resolution board involving national resolution authorities (meant to wind up failing banks) and no reference to a eurozone-wide deposit guarantee scheme.
That is almost cute. Their entire continent is sinking into industrial poverty. The most recent forecasts for GDP growth show another lost two years with zero growth. A generation of young Europeans are marginalized, disenfranchised and left with little or no economic loyalty to the nations and the Europe they are supposed to inherit. In 19 countries youth unemployment exceeded 20 percent in 2012; it exceeds 30 percent in seven countries. Greece has lost one quarter of its economy to the crisis; the Portuguese economy has not grown a dime in the past ten years. Even France, the Netherlands and Germany are now at zero growth. And government budgets are still in trouble.
Europe is deadlocked in a monumental, systemic problem – and what are the elected MEPs most worried about? More regulations on banks.
In reality, as this blog has demonstrated, the recession did not escalate into a crisis until governments started defaulting on debt. In other words, if anything should be regulated and kept in a tight leash, it is government.
EU Observer again:
The commission for its part is supposed to be tabling a proposal on a central resolution authority, in principle handing Brussels the power to shut down ailing lenders, even if their home state objected. It has indicated the plans will be published on the eve of the 27-28 June summit. But there are fears that the proposal will be delayed and weakened, although commissioner Michel Barnier, in charge of the dossier, has acknowledged the importance of both a resolution authority and “and hopefully a common fund one day.”
The Eurocrats who tried to solve Europe’s deficit problems by pouring more gasoline on the fire are now going to get the authority to shut down individual banks all over Europe.
That’s really visionary. More government to solve the problems caused by more government.
Meanwhile, euro deputies also expressed concern that measures to tackle Europe’s youth unemployment will also amount to little. The summit has been billed as an opportunity to “mobilise efforts at all levels … to get [the 6 million] young people back to work,” but initiatives have been few and under-funded. “There is only one answer to the growing anger of citizens and that is an active fight against youth unemployment,” said Austrian Socialist Hannes Swoboda. MEPs say the €6 billion that member states have earmarked for youth unemployment in the EU’s 2014-2020 budget “is nowhere near enough.”
A truly visionary idea would be to get government the heck out of the way, but that is as likely to happen in Europe as 2+2=5.
Again, this is the leadership from the European Parliament that is accusing the European Commission of lacking visions for the future. With this level of ambition among their leaders, Europeans can continue to sleep safely in their sub-waterline cabins on the Titanic. They can rest assure that even if their is no captain at the helm, their ship is on a safe course to a better future…