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Thursday, 18 October 2012

Will the Mother of the ‘Mother of All EU Summits’ finally decide something about the social-economic future of the EU and the Euro-zone?! Chief Commissioner Jose Manuel Barroso doesn’t seem too optimistic about the expected result. So am I!

Today, on October 18, 2012, is the day that yet another decisive summit starts on the future of the Euro-zone. Although this summit is very important of course, it seems that all elephants in the room (i.e. Spain and Greece) are cautiously left out of the official agenda.

Instead of ‘Don’t mention the war’, the creed of this summit could have been ‘Don’t mention Spain and Greece’. This statement led to the savvy Dutch economic journalist Hella Hueck heaving a sigh: ‘what the hell these guys will be talking about then?!”. She wrote a must-read column in Dutch on the summit (please use the Google translate service).

Here is a translated snip:

My experience with these kind of summits? After a meeting running for hours, well past midnight, you receive a two page document with vague agreements that every government leader can explain in his advantage before his national press. It’s much more interesting to look at the topics the government leaders didn’t agree upon and which subsequently will be decaying further.

I’m afraid that Hella is totally right with this statement. In her column she mentions five other elephants in the room that won't be discussed during this summit.

In the meantime in Brussels:
  • Dutch PM Mark Rutte has been planning to make minced meat of Herman van Rompuy’s proposal for a more politically integrated union with an integral Euro-zone Budget and to say ‘nyet’ as often of possible without running the risk of being kicked out of the Justus Lipsius building.
  • PM David Cameron of the UK is softly humming the tune ‘Should I stay or should I go”, concerning the British membership of the EU. A lot of countrymen would not mind if he chooses the latter.
  • Chancellor Merkel finds it officially a good idea that representatives of the EU assess the state budgets of the individual member-states, but thinks silently: ”Everybody should understand that this is only about the State Budgets of the PIIGS, Eastern Europe, France and Belgium. The first SOB that has remarks upon the German State Budget will be thrown off the Bundestag (German parliament)”.
  • PM Antonis Samaras of Greece and PM Mariano Rajoy of Spain simultaneously think: ‘Don’t mention the troika, don’t mention the troika, don’t mention…’.
  • President François Hollande of France thinks: ‘Why did I have the big mouth to tell that the Euro-zone crisis would soon be over. What was I thinking when I stated it. Now the people are expecting something from me. And I can’t deliver anything, can I?!’
  • Herman van Rompuy sobs: ‘Why do I not have the charisma of Tony Blair, the eloquence of Barack Obama and the looks of Ashton Kutcher. Nobody likes me really and nobody wants to endorse my ideas when push comes to shove. Still, I am right about it and the ideas I presented are really great ideas. Sh*t, I hate my job’.

Of course these are (bad) jokes, but they do reflect the positions that the various protagonists in this summit are in currently. With this in mind, the hopes for an agreement with muscles are very, very slim.

Jose Manuel Barroso, the uncharismatic chairman of the European Commission was very well aware of this problem. In a speech held hours before the official start, he spoke upon his hopes for this summit. Here is the larger part of his speech:

Let me start by saying that I believe we had today a very good, open and dense exchange between the social partners and also the representatives of the European institutions. I think it is critically important at this moment to have this kind of serious, open exchanges.

But let me also address a message to those in Europe that are hit hardest by the current crisis. We are perfectly aware of the very difficult situation in which many of our fellow citizens face themselves. And I want to say to all those who are experiencing hardship from the current crisis that the European Commission is making every effort, together with our Member States and social partners, to move Europe back on the path to growth and jobs. We are working to provide them with hope and perspective
[…]  we can say that we all agree on the need to come back to sustainable growth and jobs, to more competitiveness but also more social cohesion in Europe.

[…] we have to be clear that there is no easy way out of this crisis. We need the right mix of differentiated fiscal consolidation, structural reforms for more growth and
competitiveness, and targeted investment. And of course we need a comprehensive solution for the financial instability in the Euro zone, because without this solution we will not have the confidence that is so critically important for investment and for growth.
Clearly, this will require increased efforts from Member States to take decisive and immediate action.

I want to thank president Van Rompuy for putting at the centre of this European Council precisely not only new measures, but to see in which way we are or we are not implementing the measures agreed before. Implementation is key and I believe an additional sense of urgency is necessary when it comes to growth.

Very frankly I am not happy with the progress made so far. That's why I call on the European Council to accelerate the adoption and implementation of many important growth-enhancing measures included in the Growth and Jobs Compact. It is true that we have been making more efforts in terms of fiscal consolidation than on the measures for growth that were already agreed at the European Council level. We need to balance the important efforts made in terms of sound public finances with the right measures to have growth enhancing policies.

We also need to move ahead with our structural reform agenda – the country-specific recommendations have to be implemented at national level. In a few weeks' time already, the Commission will launch the next European Semester for economic policy coordination, outlining the reform priorities for 2013 in our Annual Growth Survey and we are associating the social partners for that exercise.

Finally, targeted investment at European level needs to be made in areas with a high potential for growth and jobs. This is precisely also the main purpose of the future European budget between 2014-2020. Unfortunately we see little willingness on some of our governments to ensure appropriate funding for key instruments to help to bolster the negative social impact of the crisis. And I want to make this clear – I believe that proper funding for the European Social Fund, the European Globalisation Adjustment Fund or aid for deprived persons (for which we will present a new programme next week) is very important. There are some of our citizens in Europe that are in a very difficult and emergency situation.
To conclude: today and tomorrow, EU leaders will once again have the important task to show that they are serious about their commitments and about the implementation of those commitments.

I sincerely hope that the European Council will give a strong political impetus in this regard and I believe today's meeting with the social partners was for us, for me it was certainly, a way of bringing this sense of urgency to all the Heads of State or Government. The message that we are receiving from trade unions, but also from businesses, namely SMEs, is the need to work more with a better focus on the way to promote sustainable growth and jobs at European level.

This is truly a good speech and Barroso addresses the problems correctly: during the last two years the Euro-zone and EU have mainly spoken on the fiscal aspects of the crisis, but merely failed to address the economic side-effects of the current crisis and the devastating consequences it had for the social cohesion in the South-European countries. 

These side-effects are huge and will be huge for the coming years, still they aren't addressed properly.

Unfortunately, this is only a speech and unfortunately it comes from someone with the same image-problem as Herman van Rompuy: too little charismatic and decisive to be taken seriously by the European leaders. This is exactly the reason that people like Van Rompuy and Barroso get these kind of jobs.  They are not posing a threat to anybody and let the government leaders do their thing without serious protest. Could you imagine someone like Churchill in the role of chief of the European Council? Exactly!

Therefore I am very pessimistic on the outcome of this summit. It will be the same ole’ same ole’ that it has been before during the many previous summits. All government leaders will bragg on the important results that have been reached during the summit, but the true outcome will be dead on arrival.

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