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.
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.
A key area here is the fight against youth unemployment in Europe. We cannot accept that a “lost generation” is growing up in Europe, because in many countries, more than half of the young people are without jobs. European leaders attending the Berggruen Institute’s “town hall” meeting in Paris on May 28 will address this issue.
This is where the responsibility of the German government can come in. In Germany, youth unemployment is less than 8 percent. Many young people from Southern European countries are looking for professional prospects in Germany. However, the migration of a young, well-educated workforce cannot be the solution to the problem. The young women and men would then be removing their qualifications from their home countries. Therefore, we need a large-scale program to tackle youth unemployment in Europe. Europe’s strong countries, especially Germany, can show their political and financial responsibility in this situation.
Beyond this, the May 2014 elections for the European Parliament present the opportunity to give all European citizens a voice in our common future. For the first time since the founding of the EU, the strongest parties of the new parliament will be able to select the executive leadership of Europe – the president of the commission. Heretofore, the president has been appointed by the European Council, which represents the member nations.
If European citizens participate robustly in this election, the new commission president will have the same democratic legitimacy accorded any national leader in a parliamentary system. The vacuum of authority that has existed at the European level because legitimacy was lacking – and thus the incapacity to take effective action on behalf of all European citizens – will be filled.
If candidates compete for parliamentary seats based on their vision of Europe, the 2014 election could also lay the foundation for the new parliament to act as a “constituent convention” that can sort out what limited competencies Brussels should take on – for example, financial stability, trade, and immigration – and what (mostly) should remain with the member states.
Europe can work again if governments, trade unions, business, and civil society all join together to support a new initiative on youth unemployment and the 2014 efforts to bring greater democracy and legitimacy to European government.
Gerhard Schroeder is the former chancellor of Germany. Jacques Delors is a former president of the European Commission. Both are members of the Berggruen Institute’s Council for the Future of Europe.