In Obama’s State of the Union address last Tuesday he said many things we agree with. Among the many things he said, other than the Transatlantic Trade and Investment Partnership to further reduce the trade barrier between the 2 sides of the Atlantic, there is a phrase that needs to be highlighted: “We all think that a plan for deficit reduction must be part of our agenda. But let’s be clear, reducing the deficit alone is not an economic plan.”
We are all curious to hear what President Van Rompuy will say when he goes before the European Parliament to ask for approval of the budget. It will have to be very convincing, otherwise it won’t be approved.
To everyone the night where 27 Heads of State argued recklessly down to the last Euro seemed absurd; this certainly isn’t what European spirit should be – in the interest and the common good and the unnatural alliance between Merkel and Cameron. But was it necessary to announce it simultaneously with the proclamation that the recession in Europe is worsening, that Europe decided to cut a bit more, about 3% of its already miserable communal budget, that in spite of a seemingly imposing 1,000 billion Euro doesn’t exceed 1% of the European GNP and that it should be valid for the next 7 years? Who can think about making a 7 year budget today in such an uncertain state as we are in now? Even the Soviet Union, The Economist reminds us, limited itself to a 5 year plan. But above all, how can one think about adding to the national austerity in addition to that of Central Europe? One could even understand Cameron, who returned home triumphant, but not Merkel, who seems to want to be remembered as the woman who built Europe, not wrecked it. Because she let herself be influenced by the Premier of a country that perhaps in 2020, when the budget is still valid, will no longer be part of Europe? As Romano Prodi says, “We find ourselves up against a Europe led by Germany, which dictates a recessive policy even in the presence of zero growth of enormous profits from its budget payments and of a complete absence of any type risk of inflation. Cameron won. The Euro egoisms win. It is not a good thing. Reducing the European budget put in place recently contains a precise message: Every country of the EU must only look out for its own interests. Every Euro spent for the development or European solidarity is simply wasted.”
We understand there is the problem of unanimity of all 27 Heads of Government and that funding is the responsibility of individual National Treasuries, but this farce does nothing more than render even more urgent that which must be done as soon as possible and which was inserted in the roadmap that President Van Rompuy prepared for the European Council last December, following the original indications of the European Council in June to give life to a more bona fide monetary, fiscal, economic and political Union. Among the things to do that we hope are only postponed because in the final announcement of the European Council in December it is not discussed; there was the job to allocate on a supranational level, presumably to the European Parliament, a “fiscal capacity” independent enough to be able to make anti-cyclic policy and establish an autonomous European Treasury which could activate, dialoguing with the ECB, even issuing Eurobonds, a rebalanced policy. This is a single monetary policy that is proving itself more and more like a dress that doesn’t fit anyone. For some it is too big, for some too tight. The pro-cyclic effect of the national austerity policy needs to be balanced with a federal anti-cyclic policy. Without this Europe will only aggravate unemployment problems – already at record levels.
By now we know nothing will be done on these themes before the German elections next September and maybe not before the European ones in 2014. But the objective of a federal budget that doesn’t depend solely on funding from states must immediately be put back at the center of debate up front. The President of the European Parliament, Martin Schulz, did well to say that he will not approve this budget like that – blindly. “The budget proposal,” Schultz writes on the Financial Times, “represents the most backward of all MFF (in jargon Multiannual Financial Framework which is a 7 year budget) in the history of the European Union. The agreement approved in the early morning hours represents just the beginning of negotiations with Parliament…..What is incredible is that the 27 Heads of Government approved a financial scheme that will serve only to worsen the already existing structural deficit.” The 4 big political families of Parliament jointly established that the budget, as it is, is unacceptable.
The argument between Parliament and Council, assuming it occurs, will be a sound debate. The Lisbon Treaty of 2009 determines that the budget must be approved by absolute majority of Parliament (absence or abstention count as votes against). Probably many Euro MEPs will be put under pressure by leaders of each capital to vote in favor, for this maybe it is fair in this case that the vote remains secret. One possibility could be to vote not for a 7 year budget but only for a year or two. The next Parliament together with a Commission President elected directly by citizens, should cover the remaining years. No taxation without representation – this has always been the idea of a Parliament. With a definitive budget approved through 2020, the next Parliament would find itself once again in the situation of Representation without Taxation. What’s the point of electing a Parliament with a budget already approved for its entire legislature? Where is the much acclaimed democratic legitimacy?
Maybe Helmut Schmidt is right when he invites the European Parliament to make a coup d’état. “I think it is a good thing. The Euro deputies could say no to the budget. It would create a distressing situation, which maybe is what is necessary to bring out leadership”.