AFP PHOTO / JEAN-CHRISTOPHE VERHAEGEN
This week's extraordinary EU summit proved that the European Union has an immense reserve of abilities for compromise. The deep political change that happened in France, with the election of François Hollande in the head of the French Republic triggered an immediate change of political climate all over Europe and more so in Germany. The Berlin - Paris axis will be now powered with more French 'essence' and the first signs towards this direction were present in this last EU summit.
Despite the fact that the summit did not produce any tangible results on burning issues, the language used in it by the main players gave strong signs that a compromise is now possible. The new common efforts will engulf the key issues of the issuance of Eurobonds for growth and the role of the European Central Bank.
Around those two crucial matters the EU is divided in two camps. This divergence of interests has a long history and it first appeared with the sovereign debt problem of Eurozone, two years ago. The two EU groups were formulated around the degree of the fiscal severity of the necessary measures to counter this problem. Today those same groups have made impressive steps towards a reconciliation of their initially widely diverging opinions. Now the two camps are formulated around the growth issue and the issuance of Eurobonds. On the growth and Eurobond side France, Italy and Spain are heading the alliance of almost all the smaller countries. Opposing this some austerity loving northerners, like Finland and Austria have sided with Germany. What is even more important however those issues pertinent to Eurozone have acted as a catalyst regrouping the entire European Union.
During last Wednesday's EU summit it was very interesting to watch the British Prime Minister David Cameron, to support the issuance of Eurobonds. In reality, the Eurozone's policies in countering its sovereign debt problem has implicated the entire world. All the major non European economic powers are now vividly advocating an all out Eurozone response to its over indebtedness problem, along the lines of the American paradigm. Of course such a decisive policy line would implicate the issuance of Eurobonds along with a direct lending line to Eurozone governments and the recapitalisation of banks, with resources from European institutions like the European Financial Stability Facility and the European Stability Mechanism (EFSF/ESM).
Still, Berlin opposes this prospects, on the grounds that they will weight most on the German taxpayer, an argument which is largely true. At the same time however this same taxpayer in his capacity of producer of industrial goods was favoured with full employment, being a preferred and well protected supplier of the other member states. In any case the last EU summit proved that at the end the logic of the common future will prevail and the European Union will arrive at a new and productive compromise. To this effect the German Chancellor Angela Merkel accepted to discuss the introduction of the Project Eurobonds and a generous increase of capital in the European Investment Bank.
As she said both those measure will support the weaker Eurozone economies like Greece, Portugal and Spain. She referred to those countries by name just to spell out her willingness to support them, in their efforts to overcome recession and indebtedness at the same time. After the EU summit and obviously having secured a unanimous concession, the President of the European Union Herman Van Rompuy created a working committee regrouping forces from the Council, the Commission and the ECB to draft a policy recommendation for an enhanced economic and monetary union. This recommendation will be submitted to the next EU summit of 28 June. All that point to a Eurozone shared willingness to effectively counter the euro area's indebtedness crisis by introducing shared obligations towards growth.
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