Wednesday, May 9, 2012
Hollande and Merkel can't save the eurozone by old methods alone
May 9, 2012
This week I talked to an audience consisting mainly of young Europeans in an ancient and delightful Dutch city that is becoming a little worried about its place in the history books. It's called Maastricht. Looking back over the story of how the Maastricht treaty that led to today's eurozone was negotiated, I find a vital lesson. The framework of Europe's economic policies has changed fundamentally over the past 20 years, but the way in which those policies are arrived at has not.
Now, as then, the crucial deals are thrashed out between a few key national leaders, and their advisers, in negotiations behind closed doors, often over good food and wine. Back then it was France's François Mitterrand and Germany's Helmut Kohl, with an important role played by the Italian prime minister, Giulio Andreotti. Next week it will be François Hollande, France's first Socialist president since Mitterrand, making his post-inauguration pilgrimage to Angela Merkel in Berlin, with a significant role played by today's Italian prime minister, Mario Monti. From François to François: plus ça change, plus c'est la même chose.
Today, with published documents augmented by journalistic and academic research, we can see exactly how the Maastricht cake was baked. Or, rather, half-baked: that is, the monetary union made without the fiscal union necessary to sustain it. Here, for example, is Mitterrand writing to Kohl in December 1989: "Under the Irish and Italian presidencies, the economic and finance ministers can refine the suggestions for the co-ordination of budgets." Co-ordination of national budgets! Hold your sides and laugh out loud, otherwise you'll have to cry.