EU leaders must soften stance on austerity or face the wrath of electorates

Loss of confidence in the capacity of its leaders is a big threat to the European Union

Students saying no  to austerity measures in front of the Cypriot parliament building in Nicosia earlier this week.   Photograph: Milos Bicanski

Students saying no to austerity measures in front of the Cypriot parliament building in Nicosia earlier this week. Photograph: Milos Bicanski

Sat, Mar 30, 2013, 06:00

‘I believe we are at this moment sleeping on a volcano.” Alexis de Tocqueville’s speech to the French national assembly on January 29th, 1848, sprang to mind this week following several warnings of rebellion against austerity measures around the European Union.

Turmoil over the Cypriot financial rescue package seemed to bear them out, despite Cypriots’ quiet acceptance of the eventual deal.

Mario Monti, the outgoing Italian prime minister, appealed to EU summit leaders to soften their austerity course or face his fate. The election result there showed “public support for the reforms, and worse, for the European Union, is dramatically declining” as part of a “trend which is also visible in many other countries across the union”.


Weary scepticism
The time lag between structural reform, budget consolidation and their presumed eventual positive effects of growth and economic recovery opened the way for populism and scepticism.

The Luxembourg prime minister, Jean-Claude Juncker, said at the start of the summit: “I have big worries about the coming economic developments. I won’t exclude that we run the risk of a social revolution, a social rebellion.”

French president François Hollande, whose strict budgetary measures have led to an unprecedented plunge in his popularity ratings, urged leniency for France after his finance minister, Pierre Moscovici, warned that the EU’s actions “risk a loss of social and political confidence across Europe”.

Close observers of the summit reported a heightened sense of socio-economic risk, an edginess driven by forthcoming elections and the rapid emergence of parties like the True Finns, Italy’s clowns, Ukip in the UK and neofascists in Hungary and Greece. The mood of public opinion was a moment of grave concern, according to another leading figure.

But these public and private expressions of disquiet are hardly reflected at all in actions to change course. The summit conclusions acknowledge that “the stagnation of economic activity forecast for 2013 and the unacceptably high levels of unemployment emphasise how crucial it is to accelerate efforts to support growth as a matter of priority while pursuing growth-friendly fiscal consolidation”. That last circus-horse phrase is no longer used much in public even though it still rules.

There is no sign of an alternative coming from the French under Hollande, who seems incapable of deciding whether to stay with Germany or break towards an alliance with Italy and Spain in pursuit of a more expansive policy.

Instead he plays for time, expecting more emphasis on social market measures at the June summit. His television broadcast on Thursday night insisted on the need for welfare and labour market reforms in France to encourage flexibility, cushioned by greater Scandinavian-style social security and a fresh commitment to tax the highest earners.

Germany’s September elections hang over these EU deliberations, entrenching the policy consensus there expressed clearly by Bundesbank head Jens Weidmann’s stern warning: “The deficit countries must act. They must address their structural weaknesses. They must become more competitive and they must increase their exports.”

There is little scope to act differently before then, but too little indication of change afterwards, despite the recent warning by Martin Schulz, the German social democratic head of the European Parliament: “We saved the banks but are running the risk of losing a generation. One of the biggest threats to the European Union is that people entirely lose their confidence in the capacity of the EU to solve their problems. And if the younger generation is losing trust, then in my eyes the European Union is in real danger.”

The Cypriot decisions, coming immediately after the summit, perfectly expressed the sense of policy being made on the hoof and the prevailing sense of a Germany “striving for hegemony”, as the Luxembourg foreign minister, Jean Asselborn, put it this week.


Advancing backwards
“We walk into the future backwards,” said Paul Valéry, echoing Kierkegaard’s remark: “It’s quite true what philosophy says, that life must be understood backwards. But one then forgets the other principle, that it must be lived forwards.”

Someone in the EU needs to give a message of hope that things can change if de Tocqueville is not to become highly relevant again. Anticipating the 1848 revolutions which erupted the following month, he told the national assembly: “The real reason, the effective reason that causes men to lose political power is that they have become unworthy to retain it.”

He appealed to them: “In God’s name, change the spirit of the government; for, I repeat, that spirit will lead you to the abyss.”

pegillespie @gmail.com

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