Time is running out for the European Union to come up with a solution to the ongoing debt crisis, one senior European politician has warned.
According to Pier Luigi Bersani, leader of Italy’s Partito Democratico (Democratic party), Europe needs to pull together in this time of financial uncertainty. Furthermore, he says, European citizens are willing at this point in time to accept European leadership – if only the political leadership was there.
Without solidarity in the EU, says Bersani, the Union will collapse. He compares the situation to the Agatha Christie novel, Ten little Indians: “ In the novel, even the strongest one of the Ten little Indians, at the end of the day, if he remains alone, he collapses”, he says. “Therefore we have to react, but we don’t have enough time any more. We need to put in place reactions that have a concrete basis”.
For Bersani, time is critical. Speaking on 23 May, at the leaders meeting of the party of European Socialists (PES) on the afternoon of the informal summit of EU leaders, tasked with assuring the citizens that growth and jobs have as much place in EU thinking as austerity, he strongly rejects the notion that austerity is the best policy in the midst of the ongoing European debt crisis.
“The idea that the austerity measures can be combined with the recession is not a reality”, he explains. “You can have a contagion, a kind of illness, not only of the financial system of the countries, but one that will also affect the economic system and the political one, and the social one”.
This, he says, could potentially lead to an even bigger crisis than the one that Europe is facing right now. “That syndrome will trigger radicalisation in the political system, with an increased populism and demagogy, which will have an impact on the way those societies will be governed. So we need to do something very fast – right now”.
And acting “very fast” is something that can not be underestimated if pro-European parties are to win the ongoing battle for hearts and minds in the EU, says Bersani. “Out of all the range of things we can do, there are two we can do right now. The first, would be to use the system of the redemption fund, the mutualisation of the exceeding quota (over 60%) of the national debts. This will create the basis for a win-win situation, because, given the fact that each country will keep its own debt, this will allow a new system of compensation. The first positive outcome of such a measure would be the decrease in interest rates, which will generate enough resources for new investment, and this will trigger a new economic cycle”.
The second, he says, is the fight to have a European financial transaction tax (FTT), which is currently splitting EU leaders. At the summit, UK Prime Minister, David Cameron, said that he felt the notion of a levy on financial transactions misguided. Other member states, most notably France, whose newly-elected President, Francoise Hollande made growth and wealth redistribution a large part of his victorious campaign, disagree, believing it a lucrative way of generating revenue in the current climate.
Bersani is firmly in the latter camp. Furthermore, he says, the entire financial system, the current roots of which can be traced back to the rule of Florentine leader Lorenzo de Medici in the 15th century, has been allowed to stagnate, and become corrupted.
“We are obviously in a system largely out of control when it comes to the financial banking system”, he says, adding that the recent news of a new potential crisis related to the derivatives titles, which amounts to 5-6% of worldwide GDP, is further bad news for citizens.
This situation, he says, has been allowed to happen owing to a lapse “in serious regulation”, which “ leads us to the conclusion that financial speculation is nowadays strong enough to over ride national sovereignty, and with that mechanism, with that way of working and that system, no single country is able to resist the offence. There will always be a country among us that is on the frontline”.
The EU, and solidarity between member states, he continues, is the best way to combat both the financial crisis, and the possible attendant political crisis. Referring back to his thoughts on the redemption fund, as well as the FTT, he says that these amount to “European actions”, which, while they don’t strip member states of their national responsibilities, do “create a mechanism for a collective measure”, which “can start a new thinking, a new mentality, because they can show public opinion that from the community method they can find real solutions”.
“This is the paradox we are facing: in the most critical time for Europe, we have a historic chance to link European solutions to the common feeling of public opinion. The aim set at the beginning of the European integration process of a European ideal of modernity and peace, can and must now be linked to social justice and fighting unemployment”, he says.
But, he concludes, decisions need to be made, and time is running out. A second European Council summit is scheduled for the end of June, and EU leaders need to seriously come up with solutions that can satisfy an increasingly alienated European electorate. Inaction, he says, will only make things worse. Solidarity is needed.“Not finding a solution can make the situation worse. So at least on some of the points I talked about, I expect some decisions. Unfortunately the crisis is felt in a different way from country to country, and the idea that one can save himself on his own is an idea that is running in Europe, but is a deeply wrong idea.”.