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After the Brussels ballet

There are now reasons to be cheerful about the future of the European Union.

india Updated: May 25, 2012 22:37 IST

It may be an effect of belated spring sunshine, but there are reasons to feel optimistic about Europe again. Whatever the short-term reactions of the markets, there is a fact about the European Union (EU) that some experts seem to forget each time there is a crisis: the EU is a political process, not a financial transaction or a business takeover.

In the course of the past 50 years, how many fatal predictions have been proved wrong? How many frog-leaps - forwards, backwards and sideways - have avoided dead ends? The informal dinner in Brussels recently showed that many European leaders are convinced a political compromise has to be found to stimulate growth and save Greece, the eurozone and, indeed, the whole single market, so crucial to our economies.

Of course, it comes terribly late and has proved immensely costly in social as well as financial terms. A huge price has already been paid for the Maastricht treaty being incomplete, and for a monetary union having been forged without the necessary economic and political tools. Angela Merkel is right to insist, together with her Finnish and Dutch counterparts, on the need for austerity measures and more Protestant rigour. But they should remember that Germany has not always respected the criteria for its own deficits, that on the contrary Spain has, and that there is little sense in dying in perfectly starched sheets but in intense and fatal pain.

Credit should be paid at this stage to Francois Hollande's political acumen. Not only was he somehow fortunate in the timing of the French election and the evolution of the euro crisis - luck being crucial for politicians - but his decision to emphasise the need for growth has awarded him champion status, giving hope to the Irish as well as the Spaniards, and even the Greeks.

During his campaign, he stressed again and again his determination to renegotiate the fiscal compact. Typically, 'Mr Normal' did not mention it once during his first press conference in Brussels. This sketches the kind of compromise that could be found with Berlin if Merkel, who has already agreed to project bonds and other marginal measures for economic stimulus, becomes more flexible on the major issue: eurobonds and the mutualisation of public debts. In this matter, the French president is playing hand in hand with Germany's opposition Social Democratic party, which supports the idea, and which could possibly become part of a new coalition after the general election Merkel has to face next year.

For once, the Brussels ballet was interesting to watch the other night. Hollande arrived at his first European meeting with the Italian prime minister, Mario Monti - not quite your typical leftist economist - after having cajoled Spain's conservative Mariano Rajoy at the Elysee earlier in the day. There was no Franco-German Merkozy-style pre-summit reunion, no suggestion of Frangela or Merkellande in the making - the words don't sound right, anyway.

In spite of the stern German dismissal of the idea, Hollande kept pushing for eurobonds. He was supported by a majority of his colleagues, according to the Italian prime minister. For a premiere, it was good political showmanship.

Yet the Brussels meeting has not brought any tangible results. The eurozone crisis has not been solved. It keeps ravaging our globalised economies, threatening Barack Obama's re-election prospects, and it helps populisme to develop in our democracies. In those countries that haven't been as determined as Schroder's Germany a decade ago, structural reforms are inescapable. France has not yet experienced painful austerity, but the French are convinced they are doing so. Their new president and his government will face a legislative election on June 17. On the same day, the Greeks will vote again to decide whether or not they agree to more European help and harsh conditions, assuming a possible government coalition emerges.

Had the previous - and courageous - Greek prime minister, George Papandreou, been supported last November, when he proposed a referendum, the situation would be less catastrophic. It was another example of European leaders' short-sightedness in their handling of the crisis. It is high time the union got out of the quagmire, even if it moves like a frog.

First Published: May 25, 2012 22:37 IST