New Europe is coming…

The European Union goes through a deep transformation process. Whether current changes were provoked mainly by the financial crisis is a question far too arguable. It is obvious that the most drastic changes took place not due to the economic downturn but as a result of governmental purposeful activities.

A vivid example is a German initiative introduced at the EU summit held at the beginning of February. The action programme represented as a “Competitiveness Pact” claims for economic convergence of euro zone countries, after the image and likeness of Germany. Having backed the programme, France seems to approve the claim. Other countries have got less than a month left for interpretation of the project’s economical and political benefits.

New-European “competitiveness” means:

Additionally, it is proposed to toughen penalties for failure to comply with budget standards. All the measures listed above are to be introduced in 12 months.

In fact, Germany offers a programme for an unprecedented integration of economical, social and financial policies of the EU countries, with no consultations of doctrine developers with other interested parties, with stiff resistance from a number of member states as to certain points of the plan.

Portugal, Luxemburg, and Belgium are not ready to cancel wage indexation. The Baltic states demand for easier terms in raising the retirement age as life expectancy is lower for them compared with Western Europe countries. To raise the retirement age in Austria to the general level of 67 years in 12 months, a year should be added to its every other month and a half.

If economic and social models in the countries of the EU and euro zone were similar, the measures proposed by Germany could be considered appropriate and reasonable. But for the majority of the states the introduced unification policy means a considerable drop in their attractiveness, both for business sector and for their citizens. Low taxation rates in Ireland serve as a mechanism for attracting foreign investments to the country.

In spite of “the most successful models of economic policies” declared for the Germany’s pact, it definitely lacks the real competitiveness as the levelling principle was always opposed to competitiveness. Such a background makes the announcements about the failure of multiculturalism policy by Angela Merkel, Maxime Verhagen, Nicolas Sarkozy and David Cameron especially noteworthy (with the integration positioned as an alternative for multiculturalism). It is high time to expect for an excited search of general European identity.

Still, there is no alternative for unification under the German initiative. At least, for the financial sector. At least, while the demand for Germany manufactured products remains high in China and the local economy preserves good growth rates (meaning good for Europe).

Germany refuses to back a stronger temporary European Financial Stability Facility (EFSF) and to make it more flexible until tighter pan-European budget limitations are legally approved. The markets do feel quite uneasy due to the lack of a short-term financial policy in Europe.

For now, finance ministers of euro zone countries have managed to approve only a project of a long-term European Stability Mechanism (ESM), a permanent fund that will replace the EFSF from mid-2013 with the same 500 billion euros from euro zone countries but with full lending capacity. However, funds may appear insufficient even backed by a donation from the International Monetary Fund and optional contributions from some EU countries in case Portugal will become the next in the need of a bailout after Ireland and Greece with their debts that demand restructuring.

Additional measures with further “belt tightening” and improvement of “budget discipline” may become a small coin needed for further bailout fund expanding.

Last year, along with the bailout fund, four new pan-European regulative bodies were formed: The European Systemic Risk Board (ESRB), the Euro Banking Association (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), European Securities and Markets Authority (ESMA). EBA’s Chairman Andrea Enria has already mentioned the planned unification of regulative banking mechanisms in the EU countries. Moreover, he does not exclude the possibility of national regulators abandonment.

The European Union is well on its way to dedemocratisation, according with its plans. The latest reforms show that new European society has rejected a socially oriented model.

Speculations on one or several countries wishing to leave the integrated formation sound not so groundless as they could to. And the reason is not in currency but rather in general development tendencies of the European Union.

To make any intergovernmental integration a reality, the country is to transfer a part of its sovereignty to a supranational level. This is a natural and necessary precondition of the process. But in return, the country is meant to get integration benefits. In case after the partial assignation of sovereignty “to the top level” the cost of participation and the share of lost freedom outweigh the profits from taking part in an integrated alliance, such participation evidently loses its sense.


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