NEWS

Making the case for a French leadership in a united Europe

The Greek crisis has left Europe looking nervous, divided and inept. In this uncertain drama, it is Nicolas Sarkozy that appears as the animateur of a new Europe. The French president is endeavoring to broker a new consensus behind a set of actions to not only help rescue Greece, but to reform the management of the eurozone. His biggest problem lies not in Athens, but in Berlin. It seems just a short while ago that this «petit» man was dismissed as a shallow, populist, womanizing opportunist. The economy was performing badly and the French model seemed out of date. Sarkozy was the first French leader in a generation to speak warmly of the Anglo-Saxon model. And you know the French feel bad about themselves when they feel compelled to praise the Anglo-Saxons. The global recession meant that this previously derided leader was in a stronger position on the international stage, though his popularity at home fell. Economically, the French model looked safer than the casino economics of London and New York. The Greek crisis demanded an EU response. None of the official EU leaders have met the needs of the time. Commission President Jose Manuel Barroso was reappointed at the end of last year to continue to be as inoffensive as possible. The new EU Council president, Herman Van Rompuy, had to make a statement to the press outside the informal EU summit in Brussels on February 11. His mission was to give simple, clear rhetorical support on behalf of the EU to Greece’s actions to deal with the crisis. He blew it: A faltering, nervous public statement signaled uncertainty and doubt to the markets. I guess that’s what you get when you make the leader of Europe someone who is world-famous… in his own village. Into the gap walked Sarkozy. The Greek crisis presented a wonderful opportunity for him to revive the French agenda on the Maastricht Treaty. In 1990-91, the Mitterrand administration (like President Giscard d’Estaing in the 1970s) had preached that the monetary union of a single currency needed a parallel structure of «economic government.» A balance was necessary to ensure the structural adjustment and modernization of all states. The «no bail out» rule came from the austere German «ordo-liberal» philosophy: Fiscal responsibility belongs at home. The inclusion of the rule helped Chancellor Kohl persuade his voters to get rid of the Deutschmark knowing they would not be responsible for the Italians. With the markets fearing Greece defaulting, with French and German banks exposed, with other eurozone states in serious difficulty, and with the stability of the euro under threat, the argument that the eurozone had a shared interest in preventing national failure was greatly strengthened. Still, the EU has moved timorously. Angela Merkel is, of course, heavily constrained by her domestic voters and her Free Democrat coalition partners. Sarkozy has obliged her to engage in a debate about economic policy coordination, but the German attitude is still to think of punishments and self-responsibility. The German chancellor recently told the Bundestag that the eurozone members should have the ability to exclude a member state that persistently ignores the rules. She also hinted that Germany might want further austerity measures from Athens. Hello to the «Dominatrix»! The tragedy is that German economic power has allowed it to define the game. Of course, the eurozone has been put under intense pressure by Greece spending and borrowing too much. But the eurozone economy is also being held back by the Germans saving too much and not spending enough. Both are long-term problems. Moreover, up to now, the eurozone has lacked the capacity to do much about either problem. The kind of remedy that Merkel has hinted at would be foolish in the extreme. The eurozone is not a TV reality show to expel the least popular member into an economic Armageddon. Insisting on further austerity measures for Greece invites a political crisis that would overtake the fiscal emergency. Greece’s problems created an opportunity for the EU to further develop not only its solidarity, but also its governance. European unity has been built on an economic need matched to a political idea. For most of the last decade, Europe has been suffering from slothful introspection. The current fiscal crises create a window for a major advance in the competences of the EU. Many Greeks might favor a European takeover bid. Europe is often undermined by talk of «good» or «bad» Europeans. Greece is a paradox: With fiscal indiscipline and an administrative weakness undermining its ability to support the very European ideals the public supports. Europe has struggled without leadership. An enlarged EU of 27 makes it almost impossible for a stable leadership to emerge. But, for the moment, let’s hope that Sarkozy wins over Merkel. Welcome back to French leadership? Kevin Featherstone is a professor at the London School of Economics and director of the LSE’s Hellenic Observatory.