Happy Holidays dear European leaders and good luck for 2012

The Mayans had predicted the end of the world in December 2012. On the eve of another European summit “of the last chance” to save the European Union we could have thought that the Apocalypse was scheduled for 2011. Eventually we are all alive and nothing has been resolved. Automatic sanctions, which have been added to the binding European golden rule for national budgets, or a permanent European Financial Stability mechanism established earlier than planned; in June 2012, , among other things, on the menu of a draft intergovernmental Treaty for 26 of the Member states without the British, do not seems to be very cheerful. The growing anti-European sentiment of citizens hit by severe austerity measures and the desire to limit the participation of the European Parliament and the European Commission will not make the life of this Treaty easier we want to adopt as quickly as possible.

A GLOBAL AUSTERITY IS NOT THE PANACEA

Meanwhile, simultaneous austerity measures in Europe look like being perilous. The detox after the holidays! So nothing has been resolved: the financial markets have also not waited to put pressure on the European sovereign debt. 15 euro zone countries including Germany and France are likely to see their ratings downgraded by the major rating agencies.

When you read the rating agencies’ or the major European banks’ reports on the economic perspectives, the expectations for 2012 are very clear: more fiscal restraint and tax consolidation indeed, but above all economic recovery and the strengthening the European banking sector are necessary. The European Central Bank has in fact understood this by cutting its rates and easing access to credit to European banks in order to avoid deflation. Indeed, some investors are reluctant to invest in a geographical area where leaders only plan to implement austerity.
Unfortunately it seems that the pressure of financial markets should be further necessary to encourage growth oriented measures. The Euro-bonds, the tax on financial transactions and a European economic recovery plan will have to be back on the negotiation table. The politically conservative European Parliament and European Commission are also determined to act accordingly. Let us be clear about it, the ideological block is on the side of the European Council of Heads of State and Government. By continually refusing to implement the most effective solutions because of electoral or ideological interests, the political message is undermined and new fears will emerge in 2012. But for now let us consume domestic products to please our relatives and the European economy.
 
TO ADDRESS UNEMPLOYMENT AND CLIMATE CHANGE WILL GIVE BACK FAITH IN THE EUROPEAN INTEGRATION
 
In 2012 coming elections particularly in France and Italy (not to mention the US, Russia and the change at the head of the Chinese party) may add difficulties. There is no doubt that nothing will move on by referring to a magnified national past.  Indeed to try finding similarities with King Henri IV or Charles De Gaulle or promoting the purchase of national products as an industrial policy  won’t solve the issues of unemployment and won’t  help at all to alleviate a continental crisis. With no room for manoeuvre in terms of national fiscal policy, Member States isolated in their national corner will achieve nothing. They must admit that the European Union, which carries no debt, has to initiate a real intelligent stimulus package for the European economy as a whole. Obviously in front of the tremendous challenges to tackle (financial regulation, stimulus growth package, climate change), EU Member states would paradoxically strengthen their sovereignty only with a greater and shared European sovereignty. A European financial transaction tax, pooling a part of the debt through the means of Eurobonds and the launch of EU project bonds on green economic development with the help of the European Investment Bank are interesting possibilities debated many times in the European Parliament and in the European Commission.
 
To give back faith in European integration to citizens, you cannot base the path towards recovery solely on austerity measures affecting mostly the weakest or by fostering selfish nationalistic behaviours. The recession foreseen in 2012 would maybe bring our dear European governments to reasonable actions.