Wednesday, October 17, 2012

Is Hollande Part of the Problem?

Perhaps it's too soon after my surgery for me to take on the problems of the eurozone, but Hollande's interview with The Guardian is forcing my hand. He is quite critical of Angela Merkel, whom he accuses of putting German domestic politics first, and calls on his European partners to make sacrifices for the continuation of the Union. No sooner has he said that, however, than he gives "short shrift to a German push for the creation of a federalised eurozone or political union."

If that is his position, then he surely owes it to those same partners to spell out how he intends to resolve the crisis in the long run without major institutional change. Instead, he digs at those who have proposed such change: "The institutional issue is often evoked in order to avoid making choices. It hasn't escaped my notice that those quickest to talk of political union were often those the most reticent to take urgent decisions …"

In short, he wants to put all the burden of adjustment on Germany, without offering Germany anything in return. This is a strategy very unlikely to yield results, it seems to me. The crux of the issue is what a federalized eurozone would mean. Germany wants to impose budgetary discipline by means of sanctions with teeth. What Hollande ought to be proposing is a union with a broader mandate, to harmonize social policies, make transfer payments, facilitate labor mobility, and pool investments in research and education. Instead, he simply attacks austerity, as he did in the election campaign, before he implemented the primary instrument of austerity, the TSCG, after taking power.

Once again, it seems that Europe's leading politicians have squandered six months in useless posturing, while the only effective action to keep things afloat has been taken by Mario Draghi. But Draghi has warned that the ECB cannot solve this problem on its own. A political solution is needed--a solution for which he has tried to buy time with his creative financing. But Hollande does not seem to share his sense of urgency: "We are near, very near, to an end to the eurozone crisis," said Hollande. But decisions taken at the last EU summit in June had to be implemented "as fast as possible".

To be fair to Hollande, he does point out that major institutional change was tried in 2005 and failed. So perhaps he is simply being realistic. But in this case, realism seems to be heading straight into a wall.


brent said...

Welcome back, Art--you seem to be in good form already!

Listing Hollande's omissions, you include the following quite interesting list:" to harmonize social policies, make transfer payments, facilitate labor mobility, and pool investments in research and education."

Dare I say you are starting to outline a 'social democratic' Europe in place of the 'liberal' one in place? And what about a truly 'social' one, with shared support for sustainable energy, reinforcement of the social safety net, protections for minorities, controls on financialization ...

'Which sort of Europe' has become a slogan, but in reality it is the discussion that needs to happen, rather than assume by default that 'Europe'=the liberal version that has taken hold--disastrously--in the run-up to the crisis. As long as 'Brussels' serves as an outpost of 'Frankfurt' I don't see that discussion happening, though your remarks make an interesting starting point. In its absence, one might expect narrower forms of nationalism to fill the void--with ever more disastrous consequences.

Art Goldhammer said...

Well, I've always been a social democrat in my approach to Europe as in everything else. But even a liberal Europe requires these things in order to sustain a single currency, so this isn't where the distinction between liberalism and social democracy is to be decided.

Countdown to November said...

As much as people criticize American politicians for posturing and blowing smoke, in France, the problem is just as bad, if not worse.

To begin with, Sarkozy's "rupture" with the overly bloated French state never even materialized and when election time rolled around, he fell back on populists calls and neglected every single one of his promises to transform France into a streamlined state like its northern counterparts.

Hollande and the Socialists have proven no better. They have yet again fallen into the same trap of providing no substantive alternative and their policies will only promote more of the same. Still, the French electorate is yet to fully realize this, and only months ago, bought the argument that the Socialist alternative was in fact a good alternative for France.

But was it even any alternative after all? I contend that it wasn't. While Sarkozy stumped for Euro-wide austerity, when it came to streamlining the French state, his own record was slim to none.

So while Hollande may have called for 50,000 more teaching jobs and a return to the 62 year-old pension age, these political postures are nothing more than a charade to cover up the recalcitrance of two parties to ever confront the issue of building a modern, efficient state.


While I haven't written anything about France on my blog, I've got a nice little piece on the European Sovereign Debt Crisis that you might find interesting.