However, after only one day it is obvious that the talk of the town is not Turkey. Of course, those closely involved with the relations between Ankara and Brussels are excited about Turkish Prime Minister Recep Tayyip Erdoğan’s recent North African tour and his defense of the secular state model. They are also extremely worried about all the saber-rattling in the eastern Mediterranean.
Having followed the news in the papers and on TV and after having spoken with some old friends, it is clear which issue is on everybody’s mind: the prospect of a further deteriorating economy. The main problem is the total confusion among both economists and politicians over the best way out of the crisis. I suppose the friends I keep have an above-average interest in domestic and foreign politics. They follow the news and try to determine the best solution for the ongoing problems in the eurozone. But they all had to admit that they could not make up their minds over who has the better side in this debate.
Last Thursday, the German Parliament voted in favor of expanding the eurozone bailout fund. That was a relief to many across Europe. However, doubts immediately set in, fueled by the comments of respectable economists, as to whether the move would provide more than a few days of calm to jittery markets. Perhaps Europe needs a much bigger fund, because while the present one might be able to save Greece, it will not be nearly enough to quiet the crises building due to Italy’s debt, France’s weakened banks and other troubles that loom elsewhere. Maybe Greece should go ahead and default, partially or fully, because the current, extremely tough austerity program is politically unsustainable and economically devastating. Should the big European economies, instead of cutting budgets, enact stimulus programs to create the necessary growth to get out of this crisis?
When you ask ordinary Dutch or German citizens, they will tell you they simply do not know and, what’s worse, that they have the impression their leaders do not know, either. At the same time, the information that people get through the media is maddeningly confusing, with financial specialists arguing with each other about general outlines and each and every detail of possible rescue packages.
Many analysts agree, though, that ultimately the EU has move towards a more integrated economic, fiscal and political union. In his annual state of the union address last week, European Commission President José Manuel Barroso made a brave attempt to underline the need for EU member states to hand over control of important parts of their sovereign financial and economic policy to European institutions. Although some critics accused him, after having already been in power for seven years, of not putting his money where his mouth is, many European politicians had to agree that Barroso has a point. Individual countries -- even the big ones -- are not capable of handling things on their own once they become part of a monetary union and share the same currency. It is painful to recognize this structural error in the EU’s architecture.
Rationally, it is hard to disagree with the call for a quick fix by transferring these powers to the European level. But most politicians know very well that this present need is extremely unpopular with a growing number of skeptical citizens who are aware of the uncertainty among their leaders. If their elected representatives do not know how to handle the crisis, then why should they move to an even more complicated level with even fewer possibilities of influencing the outcome? The EU is in danger of getting caught in a vicious circle in which a lack of trust prevents the adoption of measures that seem inevitable to many outsiders.
As Harvard economist Kenneth Rogoff put it: “I don’t think little steps are credible here. There needs to be a United States of Europe at the end of this, and it may well not include everyone in the eurozone. They were thinking they had 20 years to get there and instead they have 20 weeks.” He might be right, but it is still easier for an American professor to say than for a European politician to defend and implement.
