Tag Archives: Europe

Germany and a new Europe

The political significance of Moody’s downgrade

The last week could have been lethal for Europe’s future. The collapse of the Italian and Spanish stock exchange, toghether with the downgrade (from “stable” to “negative”) of Germany’s outlook decided by the American rating agency Moody’s are a powerful warning to the European Union and Germany.

In future German Bundesanleihen (government bonds) could not be considered as secure as they were during the last turbulents months, in which they have been seen by the investors as a safe shore inside the economic storm that hit the European nations. This is the silent message that Moody’s decision sent to the German establishment. On the other hand Wolfgang Schäuble too, the Minister of finance in Merkel’s government, has made clear in differents occasions that an eventual collapse of Euro and a deepen of the government debt’s crisis will mightly afflict Germany’s economy.

Compared to the scenario that we’ve seen during the last months, the most recent one is different in a sense at least: the sellings are now hitting not only the markets of specific nations (even though they were focused especially on Italy and Spain), but also the Eurozone in general. The cause of this phenomenon has to be investigated beyond the financial speculation, which however plays a part in the game. The main reason that’s crushing Europe’s financial system is the loss of confidence among the international investors, who are now scared to put their money in any European government bonds. Everybody saw Greek and Spanish citizens running to the banks, withdrawing as much cash as possible: easy to imagine that a private investor in Japan or an American pension fund will choose other countries to put his own money in.

This is the reason why Moody’s downgrade is very interesting from a political perspective too. One point that European politicians should keep in their minds is the extreme carefulness they ought to use when issuing statements about Europe’s future. Finding a shared point of view is something Europe can avoid no more. A couple of hours before last week’s stock exchange crack Phillip Rösler, German Deputy Federal Chancellor, stated that Greece will not be able to fulfil his duties, and will consequently be forced to leave the Eurozone. This sounded as a clear denial of what Mario Draghi, ECB’s Governor, had made clear the day before: “Euro cannot be renounced. There is no possible comeback to national values”. It is evident that such a chaos is precisely what European politicians must avoid, in order to restore confidence among international investors. This lack of trust between European nations risk to neutralize the positive effects of the sweeping reforms that has been adopted by the western governments, often causing a strong discontent in the pubblic opinion.

Europe is now at a crossroads: either the national leaders collaborate, embracing a common point of view, and work together for the financial union to become a polical one (which means that the debt of the nations who are in trouble must be shared by every Eurozone’s country), or they should declare the failure of Europe-project. In the first case, the taking on of such a responsibility would probably encorage the investors to recover the lost confidence in the European market: the rise of Eurozone’s markets that we have seen since last Friday (27th July) is in this sense a direct consequence of the new statement issued by Mario Draghi and Angela Merkel, who made known a strong and shared will to save Euro and not lo leave any Eurozone’s country alone. If Europe is unite, even the usual speculation can not be too harmful.

In the second case, the widespread discontent among the citizens and the increasing poverty will probably bring Europe into a political scenario affected by a dangerous instability, in which the populist propaganda could easily find many ears eager to hear their slogans. If we want to avoid such situation, is time for Germany too to declare an undisputed will to save Europe, a project that many Merkel’s predecessors have contributed to build.

Riccardo Motti

Top left: Eurozone countries’ rating, copyright Die Welt; centre: Phillip Rösler, copyright talk.onevietnam.org; bottom left: Draghi and Merkel, copyright linkiesta.it

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Les élections qui secouent l’Europe

Grèce et France face a l’Allemagne

Les élections qui viennent de passer sont largement interprétées, dans la presse internationale, comme un signal du mécontentement des électeurs face à l’austérité ou, mieux encore, face à ce qu’ils perçoivent comme étant l’austérité. Les élections auront-elles la possibilité de modifier la vitesse des consolidations budgétaires? La France sera-t-elle capable d’inverser les politiques économique imposés par l’Allemagne? Ou les élections ne conduisent-elles pas à un quelconque changement?

Le cas de la France est très important. Il est clair que le nouveau président ne dispose que d’une marge de manœuvre très étroite pour s’essayer à inverser complètement la politique budgétaire européenne. Hollande ne peut se permettre, ni ne sera capable de mettre en place un vaste programme des dépenses publiques. En regardant l’économie française, il est clair que la France a besoin de réformes ambitieuses qui auraient pour fin d’être plus compétitives et plus innovantes. Mais il y a un frein important que l’on ne peut se permettre d’oublier: la France possède déjà l’un des secteurs publics les plus importants. Le rendement financier de ce dernier est cependant médiocre. En fait, la France n’a pas équilibré son budget depuis 1974. Au lieu de dépenser les fonds publics, Hollande devra, à partir d’un point de vue strictement néolibéral, adopter le même genre de réformes courageuses que l’ancien chancelier allemand Gerhard Schröder.

Mais tout cela n’est pas vraiment en accord avec ces promesses électorales: seule une économie française plus dynamique et plus forte augmentera le pouvoir de négociation de la France en Europe. Donc, même si l’égalité est un principe fondateur de l’ancienne République française, il vaudrait mieux pour Hollande qu’il apprenne les règles fondamentales de l’économie sociale du marché, point de force de la politique économique allemande. Mais la victoire d’Hollande pourrait jouer une différence sur la scène européenne et ce parce qu’elle met en crise toute une série de convictions de la chancelière Angela Merkel, qui sera en plus seule qu’auparavant lorsqu’elle fera ses demandes sur la scène européenne.

A travers l’Europe, les électeurs disent clairement qu’il est temps de faire quelque chose pour améliorer leur vie. Face à cela, Madame Merkel ne peut se permettre de fermer les yeux. Par ailleurs, son objectif est de réduire l’inégalité des revenus. Elle veut s’assurer que, lors des prochaines élections fédérales, la gauche ne lancera pas une campagne sociale à son encontre. Un des plus proches alliés de Merkel, le ministre du Travail, Ursula von der Leyen, a donc déjà demandé un salaire minimum en Allemagne. Le signal européen est clair: les électeurs visent l’augmentation de la demande et il n’y a que cette voix qui sera utile au maintien de la politique intérieure allemande. La seule solution évidente à ces problèmes est de créer une demande plus forte en Allemagne et surtout dans le sud de l’Europe. La meilleure façon pour y arriver est sans aucun doute la voie de l’augmentation significative des salaires. Il s’agit d’un mécanisme beaucoup plus efficace qu’un programme à court terme de relance budgétaire. En fait, c’est ce que le Président Hollande veut mettre sur la table des négociations.

C’est, par ailleurs, un moyen efficace de régler les déséquilibres dans la zone euro en acceptant le fait que l’inflation allemande va augmenter au-delà de la moyenne de la zone euro, en permettant que les taux d’inflation des autres pays puissent tomber en dessous de la moyenne. Il est également probable que les retombées de la demande vers d’autres pays européens soient plus fortes pour les revenus des ménages allemands que pour les autres ménages.

On peut comprendre ainsi l’argumentation de l‘asymétrie des bases politiques entre la France et l’Allemagne. Mais il y a donc un lien entre l’augmentation des salaires allemands et la négociation d’une politique de croissance dans les autres marchés européens. Cela impliquerait une inflation supplémentaire en Allemagne au-delà de la moyenne de deux pour cent de la zone euro. En ce sens, l’élection en France peut faire une grande différence pour l’Europe. Il n’est pas certain que la France sera en mesure d’inverser son propre cours politique. Cependant, elle va envoyer le bon message à l’Allemagne afin que celle-ci puisse modifier sa vision anti-inflationniste.

Ce sont les vrais visages de l’Europe et le défi des élections peut y arriver en forçant la politique allemande à changer sa position sur les salaires. Résister à la croissance des salaires et promouvoir un boom du crédit en Allemagne serait une erreur. Le système politique allemand a commencé à comprendre que la résistance d’ajustement symétrique va coûter cher à l´Europe.Voici les points de tensions et les possibles solutions que les classes dominantes françaises et allemandes sont obligées de résoudre pour garder vivant la gouvernance européenne.

Pietro Tosi

Pietro Tosi is an Italian student of political philosophy at the Université libre de Bruxelles. He has earned his bachelor degree at Università degli Studi di Bologna with a dissertation about the concept of democracy in the work of Baruch Spinoza (thesis director: Professor Alberto Burgio). He is presently working on his master dissertation about the political thought of Foucault.

Top right: cartoon, copyright ERL; centre: Merkel and Sarkozy, copyright Reuters; bottom right: cartoon, copyright Kroll

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France, Greece, Europe: wind of change?

The general elections held yesterday in France and Greece are significant not only in relation to the new political landscape that will now occur in those countries, they are very important for the European Union’s future too.

In France, the triumph of Hollande means a deep change of the French role inside the Community. If Sarkozy has always been Merkel’s first ally, dictating to other countries the policies they were expected to enterprise in order to face the international finance crisis, Hollande’s opinion is quite different. Since the very beginning of his election campaign, he said that his idea of reacting against the crisis is based on a necessary collaboration not only with Germany, but also with countries like Spain and Italy, that were not really involved in the decision procedures until now. Moreover, the new Elysée’s guest has a new approach towards the economical measures that must be adopted in order to stop the rising unemployment and, at the same time, to give a believable answer to people’s request for a bigger buying power and better living conditions. The austerity plan imposed by Germany is based on uncontrolled liberalisations, big cuts to the welfare state, a protraction of retiremen age and the revocation of important worker’s rights. Hollande, on the contrary, has won the elections by saying that this kind of policy cannot be accepted as the only possible strategy to seek a way out of the crisis: his rescue package includes the creations of jobs, a block of the maximum pensionable age (60 years) and, in a general sense, the defense of worker’s rights. Is this proposal realistic? We are going to find it out in a close future. In this regard, one thing is for sure: a failure would mean a big risk for Europe’s political stability. The astonishing success that Marie Le Pen’s National Front has had in the first turn is a clear signal of how much such an Euroskeptic and neo-nationalistic propaganda can be tempting for a big share of the electorate.

For the same reason, we ought to observe very carefully what’s going on in Greece: yesterday’s results are in fact pretty clear. In a country that has been dramatically hit by the economical crisis, all the parties who formed the past caretaker government have been the victims of a strong elector’s disaffection. The two main Greek parties, Nea Dimokratia (right-wing, 20%) and Pasok (left-wing, 13,2%) are not able to form a coalition because of the huge loss of votes they had to face. A third member is needed, that according to Greek observers is nowhere to be found: the only party that could be appropriate in this sense, Dimar (Left-wing, 6,1%), has already made clear that is not going to be involved. Starting from today Nea Dimokratia, first Greek party, has a three-day deadline to form the coalition. If this attempt will fail, the second Greek party is going to have his own chance. And here comes a big surprise. The real winner of this elections is in fact Syriza (16,76%), an array of radical left and green groups. “Merkel should worry and Europe should hope in us”, so the leader Alexis Tsipras during an interview with “The Observer”. Why should Merkel worry? First of all, because this party gained such a result by following and inciting a strong popular opposition against the politics of austerity, wanted by Germany and implemented by the caretaker government. Greece voted against the old political establishment, considered guilty of the economical collapse and, even worse, entirely dominated by Merkel’s government.

"Seastorm" by Roger Schmidt

This sounds like a strong warning for Italian politics too: even though the situation of the two countries is not comparable, some similarities should not be ignored. Monti’s caretaker government is in fact losing public consent day after day, and society is showing a big disaffection towards the parties that decided to take part in it. Moreover, a large decline is still affecting Italian economy, and the request of social equity and sustainable development, similar to the Greek’s one, is clearly rising.

It seems like a wind of change is blowing in the sails of the vessel “Europe”, a wind who speaks of hope and social justice. It remains to be seen whether it will be able to bring the ship in safe waters or nationalism and anti-Europeanism will rock the boat.

Riccardo Motti

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