How do we escape Europe’s purgatory?

There are good reasons to fear the future of Europe – and to fear for the future of Europe – when a moderate and deeply pro-European figure like Clément Beaune launches what is basically a petition in Les Echos, as he did on March 3^rd. But let’s be real, because the old timers who built Europe know very well that this “historic opportunity to change the budgetary rules of Europe” that the Secretary of State for the European Union is calling for will evidently not be seized upon by the European authorities who have with a knife held to their throats suspended the infamous budgetary rules of the Stability Pact. And we should not be impressed by the fiscal and budgetary responses forced upon them last summer, counting for at the very most 5% of the Union’s GDP, when the US, the UK, Australia and even New Zealand have put stimulus programmes for their economies in place in the way of 10 to 20% of their respective GDPs. The reality? It’s what I’ve been calling since 2009 throughout many books and articles the “original sin” of the euro, which has continued to paralyse our European governors, alas even in times of adversity. The 750 billion promised only corroborates this disheartening lukewarm approach of Europe’s, and this demoralising negation of solidarity. The most pitiful thing – among others – is that this sum will be scattered over 6 years despite the EU having lost 15 GDP points during just 2020 alone! What good will 4 billion euros do, generously granted to Italy, over several hypothetical years, when this country saw itself impoverished by 170 billion in 2020?

However, because of the pandemic, Europeans have noticed that Europe can grant this money, if it wants to. They have also understood that the European Central Bank – that has actively intervened – can indeed become a lender of last resort, like the US Federal Reserve or the Bank of Japan. And this is in contrast with what the hyper-orthodoxy wanted to make them believe when it squeezed the blood and tears out of nations it disdainfully labelled as spendthrifts at the height of the so-called “sovereign debt” crisis that needed not to happen. The citizen’s realisation of the imperfections of the European construction is alas not yet complete because a fundamental ingredient is still missing, given that nations that adopted the euro are still not benefiting from a so-called “sovereign” currency. For us Europeans, it’s like we opted to do everything in a foreign currency – a bit like certain countries that have “dollarized”, as we say – and the euro remains in some way like a foreign currency, a bit like if for example France had indexed the franc to it.

Another basic fact is that a country with a monopoly on the creation of its own currency that is sovereign and freely convertible is never threatened with bankruptcy, especially if it is part of a European Union that has the world’s highest GDP and therefore formidable strike power. The Union no longer has to fear the punitive expeditions of financial markets that cost already a heavy price for their isolation to some member states such as Italy, Spain and Ireland, which endured soaring costs for funding their public debt for not being supported by a central bank acting as a lender of last resort. May the European citizen confront this crucial question, because behind this technical debate hides a real choice for society.