Three years into the crisis European leaders seem to be convinced of the necessity of European unification. They consider that Europe’s dissolution would be a disaster. According to analysts of Prognos, a European think tank, the extreme scenario of an exit from the Euro of 4 countries Greece, Portugal, Spain and Italy, would cost the global economy a loss of growth of €17.2 trillion ($22.3 trillion) by 2020!
Closer economic and political unification presupposes immediate agreement on major pressing issues such as the banking union and finally a new treaty. This presupposes above all, that European politicians present clearly, sincerely and convincingly to their citizens a major implication: that there will be a transfer of national sovereignty to the European level.
Are European citizens ready to accept such a solution?
I do not think so.
The prolonged austerity imposed on the citizens of ailing economies, and the burden put upon taxpayers of richer countries for the aid to weaker ones, generate anti-European sentiment. Income and living conditions of Member States keep diverging dangerously. From North to South, nationalistic tendencies are on the rise and so are secessionist, extremist, populist and neo-Nazi forces. All this, if left unchallenged, can gain overwhelming influence and could lead to the disintegration of the European Union.
The European leadership has the responsibility to speak not only of a banking union and other incomprehensible institutions but also to persuade European citizens that more integration means more prosperity, more jobs, more stability.
A disintegration of the EU would lead to tough competition, protectionism and instability on the European continent and in the worst case scenario the failure of the European peace project could even lead to war. Without their Union, European countries will have a difficult and insignificant role in the global economy. By 2050 the world population will be 9bn and Europe will only represent 7% of that, down from 20% in the 1950s. The largest EU countries will represent a maximum of 1% of the world population. In 2050 Europe‘s GDP will only be 10% of world GDPm, down from 30% of in the 1950s.
Who will assume Europe’s leadership? No EU member, not even Germany, can unilaterally dictate the rules. Germany is the most probable, the de facto candidate, but the EU’s largest and strongest Member State managed with its political stance to be an isolated giant today.
Germany should use its leading position, founded on its strong economy and its size, to build consensus and convince governments and people of Europe. This means a new approach of its role: a paradigm of solidarity, discipline and vision. Instead of dictating the rules or finger pointing and beyond being the inspector of others’ compliance, Germany needs to become a builder of consensus and thus gain respect.
The current German stance produces solutions that can be characterized as ‘too little, too late’. Germany seems to be guided more by internal electoral considerations than by a long-term European vision, which is essential for Germany itself.
A specter is haunting Europe, the specter of discord and fear, the specter of hate and mistrust, the specter of reborn stereotypes of enmity. To face the rising poverty and extremism we need hope, trust and solidarity. A new narrative is needed. The European leadership should propose a new project and a new narrative to the citizens of Europe that consists of:
1. Peace (the EU’s great achievement) and respect for nations and people.
2. A new geopolitical role for Europe (Europe needs to be more than a soft power)
3. Democracy (a new treaty and enhanced democratic legitimacy in decision-making)
4. Economic Justice (harnessing the financial sector which should also share in the burdens of the crisis)
5. Equitably shared Growth (enhance growth and ensure convergence of competitiveness and standards of living between Member States)
Recession with massive unemployment, deteriorating living standards and widespread poverty will not help. Beyond stabilization measures, announced but not implemented, actions to bring back growth in Europe are urgently needed. Without cooperation between European institutions and the ECB for a project of fiscal stimulus (similar to the American one), a policy of perpetual austerity will not automatically produce growth. In every turn of history leadership is what counts. Today’s leadership needs to convince and inspire European citizens, with vision and deeds.
This column is based on a speech by Anna Diamantopoulou given on 23 October 2012 at the Harvard Kennedy School as an autumn 2012 Fisher Family Fellow. It forms also part of the European growth strategy expert sourcing jointly organised by Social Europe Journal, the Friedrich-Ebert-Stiftung, the Bertelsmann Stiftung, the IMK of the Hans Boeckler Stiftung and the European Trade Union Institute (ETUI).
It is a great joy to be here today, at the Friedriech Ebert Stiftung Institute in Berlin, in my new function as Greek Minister of Development, Competitiveness and Shipping.
This crisis that we are all facing today constitutes an existential threat for both the Eurozone and the EU. By this point, it has been established that no easy political or economic fixes exist. Although the crisis emerged around 2009 and escalated in 2010, its roots go back to the formation of the common currency – and yesterday’s faulty institutional architecture continues to haunt the policy decisions of today.
As you well know, the Private Sector Involvement Agreement and the discussion on haircut of the Greek debt have been almost completed. The question now for Greece is the one exactly put on the title of this panel: jobs and growth. Austerity is necessary in difficult times in terms of eliminating wasteful spending and creating a leaner and more capable state --- however it can achieve few things without a clear plan for growth.
Anna Diamantopoulou participated in the Conference on Progressive Governance entitled "Towards Growth and Shared Prosperity". The panel participants who spoke:
Joel Benenson, American pollster and founder, Benenson Strategy Group. Obama’s lead pollster, guided presidential campaign 2008.
Olaf Cramme (Chair), director of Policy Network
Gordon Bajnai, leader of “Together 2014” and former prime minister of Hungary. Former head of National Development agency, minister of Ministry of Local Government and minister at the ministry of National Development and Economic Affairs.
Martien Kuitenbrouwer, Dutch Labour Party (PvdA) president, District Council of West Amsterdam
Marlon Marshall, former deputy national field director, Obama 2012