18 April 2014

Paul N Goldschmidt: No! Europe is not to blame.

Conferring on Europe adequate resources lies within the competence of Member States, whose flexibility is constrained by the rule of unanimity, still required to impose any meaningful change. To pretend that "changing policies" is possible and thereby fund a further meaningful European stimulus package without a profound revision of the existing institutional and legislative framework is pure fantasy. Such a revision should provide the Union/EMU with, among other things, a significant budget financed by adequate "own resources" and endowed with an autonomous borrowing capacity. In the mean time, whatever the outcome of the European elections, the Union is condemned – as long as it wishes to remain within the rule of law – to operate within the restrictive limits of existing arrangements until such time as Treaty amendments are negotiated and ratified.

As to Mr. Montebourg’s call for a weaker Euro, it is hard to see how this would improve meaningfully French competitiveness: indeed, France’s trade balance is positive with non EMU countries and any increase in exports would consequently only strengthen the currency; it is with its EMU partners that the trade deficit is abyssal and euro weakness would provide scant relief.

On the other hand, dealing rapidly with excessive budgetary deficits and controlling sovereign debt levels should remain a high priority (particularly in France) because, should the hoped for economic upturn materialise, it is inevitable that interest rates will rise with debt servicing charges rapidly absorbing any improvements in tax collection resulting from the upturn (the mirror effect of lower receipts during recessions).

In conclusion, designating Brussels and/or the ECB as responsible for correcting several decades of budgetary profligacy by Member States is a lie. Countries that have benefitted from EU/EMU financial support have accepted painful sacrifices (sometimes excessive due to the lack of preparedness of authorities to prevent and then to manage the crisis), are now at least seeing some real improvements. To believe that France can escape curtailing some of its bloated social programs is a pipe dream; it behoves the government to ensure that efforts are spread with a maximum of equity, spearing insofar as possible the most vulnerable citizens.

It is also untrue that no alternatives exist: it is perfectly possible to attenuate the sour taste of "austerity"; such an alternative calls for "more Europe" – not less - in order to create a truly supranational sovereign entity capable of providing its citizens with greater means and reinforced solidarity. It is only at European level that it is possible to generate the additional resources which are so badly needed, as is so clearly demonstrated presently in the field of defence.  This alternative requires, of course, substantial additional transfers of sovereignty for which most politicians, of any persuasion, are far from prepared to condone. This stalemate, which is likely to be confirmed by the results of the forthcoming European elections, can only lead to the final breakup of the EU and the end of the European dream.

Full article

Paul N Goldschmidt, Director, European Commission (ret); Member of the Advisory Board of the Thomas More Institute

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 E-mail: paul.goldschmidt@skynet.be / Web: www.paulngoldschmidt.eu

© Paul Goldschmidt