Schroeder and Delors: Unity is as important as reforms in Europe
There must always be a correlation in Europe between the willingness to engage in structural reforms on the one hand and the willingness to show solidarity on the other. We need structural reforms. But we must also add growth components to the austerity program.
Berlin and Paris
The economic turmoil of the past several years has pushed Europe toward greater integration, starting with financial stabilization and a banking union that is still a work in progress. Everyone now recognizes that a single currency zone without a common fiscal policy invites the kind of crisis we have all been experiencing.Skip to next paragraph
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Europe has reached this stage grudgingly and with great strain, however, through agreements among national government leaders in which many see the largest and most powerful states as undemocratically foisting their policies on the rest. Especially in Italy, Greece, and Spain, where the social costs of adjustment have been high, a backlash against the very idea of Europe is under way.
We are now seeing the worrying rise of parties and movements that seem to think nationalist assertion will free them from the common imperatives of governing Europe, or who believe protectionism will enable them to escape addressing Europe’s lack of competitiveness.
What is manifestly clear is that European citizens will not follow the path of reform and further integration unless they have a voice in shaping its course – and unless there is a common, emergency jobs program that shows Europe works.
There are several lessons to be learned from the reform efforts we have seen so far in Europe.
First: There is a gap between the time the painful decisions are made and the time when the reforms take effect. This can – as in Germany – take up to five years. It can be problematic for politicians when elections take place during this time span, as we’ve just seen in Italy.
Second: Structural reforms can only work in conjunction with growth. In general, the current debate is a repeat of the one we already held in 2003 and 2004 concerning the European Stability and Growth Pact. With the reform of that pact, it was not Germany and France’s intent at that time to weaken the criteria. Rather, we were concerned about strengthening the growth aspect of the pact, since Germany was not then able to support billions in savings alongside the reform policies.
Germany must now give its European partners this same opportunity. Greece, Ireland, Portugal, Italy, and Spain have made progress in restructuring their finances. Cyprus will also have to go this route.
The economic and political situation in these countries also shows that savings alone is not a means for overcoming the crisis. On the contrary: There is a risk that national economies will be quasi-strangled by the strict austerity policy. To the degree that they are making structural reforms, they also need help, as these countries show.
There must always be a correlation between the willingness to engage in structural reforms on the one hand and the willingness to show solidarity on the other. There is no “either growth or austerity.” We are convinced that the two can be combined in a meaningful way; actually, they must be combined. We need budgetary discipline. We need structural reforms. But we must also add growth components to the austerity program.