EU needs to shift focus from bailouts to fiscal union
How do we move closer to fiscal union while retaining enough independence?
TOWARDS THE end of last week, as Finland bickered with its European partners over its right to collateral for any further loans to Greece as part of an extended bailout programme, those urging Europe to show that it has the commitment to defend the euro had reason to despair.
Probably most disheartening has been the conflicting national voices issuing on an almost daily basis over the past five weeks. Writing earlier this month on the growing crisis in Europe and the United States, Nobel economist Joseph Stiglitz said: “now the scale of the problem is apparent, a new confidence has emerged – confidence that matters will get worse, whatever action we take.”
That confidence is based not on the fact that solutions are not available but that there appears no political will to shape naturally sceptical opinion at home in many of the euro’s member states.
Instead, politicians of all hues appear captive to their own local, short-term electoral interests. As a result, Europe is reacting after the event and in a piecemeal manner.
In the aftermath of the first stage of the financial crisis, triggered by the collapse of Lehman Brothers, European Central Bank president Jean Claude Trichet had hailed the strength of the euro in meeting that challenge. “Would Europe have been able to act as swiftly, decisively and coherently if we did not have the single currency uniting us?” he asked. It seems a hollow boast now.