Imagine for a moment that European leaders, in an untimely attack of lucidity, looked at the reality of the Union through the eyes of ordinary citizens.
The order of their concerns would be inverted: growth and employment, which rank as the principal objective in all pacts, would actually become the principal objective. The rest of the problems, like sovereign debt, the deficits and corresponding adjustments, as well as the restructuring and recovery of financial institutions, would become instrumental to that central objective.
The real economy, the one that generates wealth and creates jobs, is being destroyed at full speed. It lacks credit, even for the working capital of viable companies; the rhythms of (necessary) budgetary adjustment are absurd and no one is willing to modulate them in order to get us out of the recession. He who does not grow does not pay.
The debt problem is being treated as a solvency problem and the recession that induces this type of behavior will in turn generate the dreaded situation of insolvency. Thus, the confusion of these instrumental policies with ultimate policies is leading to disaster. That's why, suddenly, seeing the dramatic drift, the European leaders decide that:
- The Monetary Union cannot function without an Economic and Fiscal Union, and they set those in motion.
- The European Central Bank will act as if it fully were a central bank -- like the Federal Reserve, like the Bank of England -- and is going to fight speculation against sovereign debt, to set rates according to the needs of the real economy and to facilitate enough liquidity.
- The European Union will function as a Union Bank, with equal rules for all within the shared space, and with a guaranteed fund for European deposits.
- Those purely speculative "short [term] operations", which are destroying the value of listed companies with no relation to their viability and profitability, will be forbidden.
- A system of "Eurobonds," covering up to 60% of the debt, with reasonable interest rates, will be created as a counterpart to the Fiscal Union and acceptance of the Stability Treaty.
- The European Investment Bank will create an "investment fund" for 4 years worth 200 billion euros, and invite other participants, from China to the Arab countries with surplus savings, to participate in the development of infrastructure projects already planned and set, to stimulate demand and generate activity.
- Germany decides to contribute to this stimulating of demand with its capital surplus encouraging its own demand and showing the rest of Europe that it wants to be a European Germany, not the opposite.
Ugh! Excuse me. I'm talking about the European Union that moves towards the construction of the political union as a shared public space, in which each country cedes sovereignty and shares it with the rest, with effective institutions that make bold and timely decisions. Will that be possible?
This post was originally published in Spanish on El Huffington Post.