Guest post. Translated from the French by Tim Gupwell
We recently touched on the quartet engaged in drawing up a composite motion, in order to faire avancer le schmilblick (= to move the schmilblick forward, or in other words to make a limited contribution to solve a complex problem). Before describing their efforts it may be helpful to recall the definition (*) given to it by its creator, Pierre Dac.
Mario Draghi, Jean-Claude Juncker, Herman Van Rompuy and José Manuel Barroso (in no particular order) may not be aware of the schmilblick. Nonetheless, this has not stopped them from searching for it in the form of a bold compromise formula destined for the next summit, with the aim of exchanging debt pooling measures in return for the reinforcement of the budgetary union held so dear by the German Government. Because this is how the bidding is likely to pan out. But where is the happy medium? Sensibly, this question will be put back to the end of the year.
A new leak has revealed the existence of a proposal to toughen the conditions of the fiscal pact, giving to “an establishment in the Eurozone” not only the right to oversee but also to impose corrections on any state budgets which depart from the deficit and debt ratios. What do the authors of this document hope to obtain in return? Short term eurobills? A fund for financing the debt which exceeds a threshold of 60% of GDP? The possibility of the ESM bailing-out the banks directly?
The discussions are likely to be difficult, with Angela Merkel having swept aside these different options as “economically unviable and counter-productive”. No one at this stage knows whether this is a definitive position or a negotiating position. The final preparations will continue on Tuesday evening, and then on Wednesday during the meeting between Angela Merkel and François Hollande, the day before the summit.
“When I think of the summit, what worries me is that there will be all sorts of ideas about how to pool debt and not enough ideas about controlling the finances of the Eurozone states” declared Angela Merkel. “There has to be a balance between guarantees and controls” she went on to add. “This does not mean abandoning sovereignty, it is sharing”, echoed Jérôme Cahuzac, the French Finance Minister, in a praiseworthy attempt to duck the issue.
The debate has moved away from finance and the economy. By demanding the prior realization of a ‘political union’, the Chancellor is trying to create a fait accompli as quickly as possible in order to reinforce a budgetary pact on which she had to compromise to get it accepted. At the very least this raises a number of questions about future democratic governance, regardless of the references by Wolfgang Schäuble, the German Finance Minister, to the election of a European President by universal suffrage. The political union as seen by Angela Merkel is increasingly reduced to a dispositive aiming to reinforce her budgetary policy and ensure the maintenance of a debt reduction strategy which will not be allowed to evolve, unless in exchange for some very solid guarantees.
Seen from this point of view, this policy is high-risk, as is the strategy which she claims to be reinforcing. How can it be possible to get an endorsement for this kind of vision of Europe, closely associated with fiscal austerity, structural reforms, and the quest for a renewed competitiveness based on diminishing labour costs? We have already glimpsed worrying foretastes of the kind of reactions and rejections that such a prospect is likely to arouse. The affirmation of a clearly defined alternative strategy will only be of greater importance.
The hazy pieces of a game still being constructed are on the table and the assembly instructions remain impossible to decipher.
(*)“The Fauderche brothers’ Schmilblick is, it is important to emphasize, rigorously integrated, which is to say that it can serve both as an interior Schmilblick, thanks to the reduced size of its gorgomoches, or as a countryside Schmilblick thanks to its mostoblase and its two glotsifres which thus allow it to urnapilate the istioplocks even at the lowest temperatures. Chins up and hats doffed for this wonderful invention which tomorrow, or the day after tomorrow at the latest, will germinate abundant wheat from victorious concrete which will open both the double doors of the carriage gate to a better future in the peristyle of a new world….”(Pierre Dac)