The ever closer union
Civitas, 17 August 2011
Each time the EU finds itself floundering, you can be sure of two things: there will be a rush of people saying ‘I told you so’, and the respective leaders of France and Germany will appear, united on a podium, with a ‘cunning plan’ to salvage the day. This usually involves some suggestion of ‘deeper integration’ to prevent future misdemeanours; it also, more often than not, consists of a mere skeleton of an idea, requiring drastic fleshing out before the potential can really be examined. And yesterday’s Franco-German Summit, which was the first public step calling for closer economic and fiscal integration, slavishly followed this trend.
As the crisis continues to permeate the Eurozone (even France has now joined the list of those ‘in trouble’) and the possibility that the whole project could go under becomes ever more a reality, this united couple, so often the drivers behind EU integration, took centre stage in Paris in an effort to calm the jittery markets and stop them diving further. The pressure was on for the two to deliver a summit that would restore confidence in the Eurozone, with Italy’s situation growing more precarious by the day and Spain’s not much better. Yet, instead of delivering on the now, they looked to the future for answers.
Among the measures unveiled yesterday, the pair will push for a financial transaction tax (something the UK Treasury was quick to rile against – arguing any such tax would have to be applied globally to prevent the relocation of the transactions covered). Furthermore, by 2013, Germany and France hope to share a common corporate tax base in a move which could herald the start of harmonised taxation across the EU. France and Germany also want to see Eurozone member states constitutionally bound to balance their budgets. Moreover, the closer economic integration of Eurozone member states should be monitored through biannual summits, according to yesterday’s announcement. And, Herman Van Rompuy, who has always appeared more comfortable mediating quietly from the side-lines, has been thrust into the spotlight by the new proposals, as Merkel has her eye on him to chair the new summits.
However, consistent with earlier statements, Merkel put her foot down with regards to the proposed increase in funds for the EFSF. Eurobonds, if the duo have anything to do with it (which they most certainly will, given how heavily the Eurozone is reliant on Germany), are also off the cards for now.
Anyone expecting answers to the very real problems of the Eurozone crisis will have undoubtedly been disappointed by the lacklustre summit yesterday. Germany and France may be the muscle behind the Eurozone but they failed to offer any tangible solutions to what is being faced right now, rather focusing on a blueprint for a more economically integrated EU in the future. Whilst EU Commission President Barroso congratulated them on their ‘important political contribution’, it seems unlikely that it really is anything of the sort; rather, it continues in the well-trodden footsteps towards closer integration; the apparent panacea for all the Eurozone’s problems.