Discursive summit in many shades of grey
Low-key meeting as political support for austerity falters
European Council President Herman Van Rompuy defends the discursive nature of the summit pointing out that solutions to the issues are not “not black and white”. Photograph: Eric Vidal (Reuters)
It was not a “crisis meeting,” as Enda Kenny said before it got going. Eu rope right now is enjoying a period of relative calm in the financial markets, boosted by the Europe an Central Bank’s commitment last year to buy the bonds of euro zone countries if needed.
Bond yields of indebted nations have fallen, Ireland has successfully issued a 10-year bond earlier this week. Even the surprisingly muted market reaction to the results of the inconclusive Italian election has suggested that investor confidence in Europe is strengthening.
But Europe is facing a deeper, arguably more worrying, structural challenge. Rising unemployment and economic contraction has cast a shadow over the European landscape.
The European Commission itself has downgraded its economic forecasts for the year, with individual countries unable to meet their prescribed deficit reduction targets for the year.
European officials argue that Europe is not to blame, pointing out that the economic crisis is not confined to Europe.
Nonetheless, political support for Europe’s economic response to the crisis is beginning to falter.
The austerity versus growth debate that has been rumbling on since the onset of the crisis has come into sharp focus in recent weeks, not least due to the Italian election, which was widely interpreted as a public rejection of Europe’s strict fiscal policy.
Negotiating this fine balance between much-needed fiscal discipline and the need to implement growth stimulus measures, was the focus of this week’s summit.
“The possibilities offered by the EU's existing fiscal framework to balance productive public investment needs with fiscal discipline objectives can be exploited in the preventive arm of the Stability and Growth Pact,” the summit conclusions said, though any of these “possibilities” will have to be sanctioned by European authorities.
The changes agreed upon yesterday were a question of nuance, however, with little detailed stimulus plans emerging from the summit. European Council president Herman Van Rompuy defended the discursive nature of the summit, pointing out that solutions to the issues are “not black and white”, but instead “many shades of grey”.
While there is a strong argument in favour of measured consideration rather than crisis-driven reaction in formulating policy, whether such reflection is enough for European citizens in another matter.
European leaders, including European Commission president Jose Manuel Barroso, repeatedly referred to the challenge of translating economic policy into the real economy.
The result of the Italian election was a stark reminder for European leaders of public frustration with a tough economic policy that has yet to generate significant results on the ground.
The problem for Europe is that economics does not operate in a vacuum, but within the realm of politics. European citizens want results.
European leaders may argue that underlying economic and structural reform is the only route out of the crisis.
The problem is that the world of realpolitic might not be prepared to wait around that long.