CURRENT AFFAIRS
EUROPE

NOW WHAT?
The chaos in Greece, the euro at risk, and a round of elections that, starting from the changing of the guard in Paris, reopened the battle between "austerity" and "growth." We are at a crossroads that is no longer an ideological dispute, but a question of survival. We said that, in order to revive the economy (and society), we needed "more Europe." Now the European Union is on the verge of a crisis of heretofore unknown proportions. Were we wrong? Two protagonists, and a series of facts, answer.

BY LUCA FIORE

What will happen now? Will we all be poorer? Will we be governed by people who speak a language that is not our own? What will happen to our savings if the euro collapses? There are many precise questions, but the answers are few and vague. In order to look at the future of Europe without too much anxiety, we need a good dose of visionary ability. We need to know how to envision a completely different future. And we need the courage to abandon some well-established certainties. The euro remains at the mercy of the enigma of Greek politics, the victory of François Hollande in France threatens the intransigence of Germany's Angela Merkel, and the winds of anti-politics blow all across the Continent. We have come to the rendering of accounts, because today the European Union faces the dilemma: to be or not to be? To be a "union" in the fullest sense–giving birth to what some like to call "the United States of Europe"–or simply to return to "not being"? It is difficult to orient oneself, given that the European tempest has not yet blown over. But Professor Jean Dominique Giuliani, President of the Robert Schuman Foundation (one of the most important think tanks that study the future of the EU), has steady nerves. And he has no doubt that there is no going back.

Professor Giuliani, up until the French election, the European Union was led by the so-called "Merkozy" duo, according to the logic of "economic austerity." Today, with François Hollande, the Paris-Berlin axis has cracked. Will Europe be able to find a synthesis between austerity and economic growth?
Before talking about growth, it is necessary to resolve the problem of the deficit and debt reduction. This is what the fiscal treaty known as the Fiscal Compact does. It's not about austerity; it's only about the necessity of better management of government spending. It was the basis for the politics of quantitative easing [the purchase of financial products from private banks with the goal of stabilizing the balances of the institutions themselves] of the European Central Bank, and of the return of trust in the markets. The treaty also provides for some measures for growth, which have been prepared over many months and which should be the object of the decisions at the European Council on June 28th and 29th. The election of François Hollande does not change anything about the French-German axis, and I am convinced that he and Angela Merkel will form as strong a pair as the preceding ones.

And yet Hollande seems to have an approach that is very different from Merkel's.
In his electoral campaign, Hollande took on the growing concerns and uneasiness that many have in Europe and elsewhere. There are many who protest against generalized austerity politics and demand measures to stimulate growth. Everyone agrees on the objective, but not on the means for achieving it. Twelve heads of state and government, led by the United Kingdom, demanded a politics of revival and growth, through measures of liberalization of the job market and completion of the internal market in services. There are many proposals which are not like those of Hollande, who suggested a Keynesian politics of revival (or stimulus), through spending for services and infrastructure financed with project bonds–that is, with European loans. This is the object of discussion, particularly between France and Germany. I don't doubt that it's possible to find a compromise, because the new French President has also recognized the importance of reducing the deficit and debt, and has taken steps in that direction.

What do you think about the Fiscal Compact? Is it realistic, or too severe?
It is an indispensable treaty, which marks a new step toward common management of the economy of the European Union. It must be ratified, and it will be. The reorganization of public accounts is essential, even if it is difficult for those countries that have lived beyond their means for a long time.

How can we stimulate economic growth?
This is a difficult question. We will probably have to go forward with one market, which entails a deregulation of some sectors. Another way would be that of increasing fiscal integration and of budget politics, sharing budgets and establishing, at least for some, a common taxation. Then it would be possible to divide the debts of the nations into installments. But they would lose their power, as nations, to set taxes and to vote for their own budgets. This is possible if the European institutions are truly democratic, if the European Commission, the "true European government" is elected, and if the European Parliament represents all of the citizens of the EU in the same way.

What role can Italy have in this context?
The Italy of Mario Monti can show us the way of courage, with some bold reforms, but also the way of a greater consideration of social aspirations and solidarity, which must remain the distinctive mark of Europe, particularly toward its weakest members.

Is it realistic to think that the European Union could collapse by contagion, after the cases of Greece, Spain, and Portugal?
I don't believe so. In reality, the possible way out seems to me to be what I just said: greater European integration with an increased and real democratization.

What role can the United States have in stimulating European revival?
Nothing in particular. Their economy and ours are very closely linked, but the two are still different. The American economy is more financial; it adapts better to debts and deficits because the United States is one country and can thus consolidate its debts, and its currency, the dollar, is accepted all over the world.

Now, more than ever, national interests seem to be in conflict with those of the EU. Is this really the case?
We are witnessing a "renationalization," that is, a new rising of nationalisms, because the creation of the European Union, which is a long process, is not yet complete. We are in the middle of a ford. Some will want to turn back, but they won't be able to because, essentially, their national interest already passes through that of Europe. In the present global competition, a European country on its own would not have many possibilities.

Today, politicians are divided between those who believe that we need "more Europe" and those who, instead, ask the EU to take a step back. Is "the United States of Europe" only the dream of some, or is it a practicable path?
For the European economies, it is the only way out. When taken together, the European economy remains the first in the world, ahead of the United States. It is double that of China. United, we have the possibility to respond to all of the challenges. Divided, we have no chance. The politicians know it, and the people have understood it, too, but our countries are old and our identities are strong, and many fear that they will vanish in a larger whole. Nevertheless, we can do what Robert Schuman did in 1950: concentrate on the main problem. Today, it is coming out of the economic crisis through integration. The rest will follow.

In this dramatic and uncertain moment, what would you say to a young person who asked you, "Why Europe?"
Sixty-two years of peace. The reconstruction of a Europe that, in 1945, no longer had any hope of counting in the world. An enormous recovery that made us the most prosperous continent (one-fourth of the world GDP), the place where everyone wants to live. And an organization–the European Union–to which everyone wants to adhere. The challenge is different today, but its nature is the same: we have to take some further steps to reach a political union that will allow us to resolve all of our problems. It's not easy. We don't have politicians with a broad enough vision–that is, who are courageous enough to propose it and, even better, to enact it.