Europe needs to be saved from itself
Europe was once the envy of the world. It was synonymous with world class manufacturing, education and scientific break-through. Sadly this is no longer the case. The EU is in danger of becoming a second rate power on a global stage.
Already it is losing influence in Washington as the Obama administration forges closer links with Asia and in particular China. The debt mountain is in danger of strangling European growth for years to come. The tensions between the core and periphery countries remains unresolved. Europe’s powerhouse Germany looks as if it wants to shape its domestic economic agenda solely along the lines of national interests. Southern European countries have so far shied away from introducing labour market reforms that would increase competitiveness.
The real problem is leadership. The legislative reforms introduced through the passing of the Lisbon Treaty was supposed to make the EU more coherent and speak with one voice. But for that to happen what is really needed is a change of mindset. The President of the European Council Herman Van Rompuy doesn’t seem to understand the challenges facing the EU. President Sarkozy and Chancellor Merkel resemble bickering competitive children rather than European Statesmen.
What the EU needs is a euro area bond market, a European Monetary Fund, greater euro area governance that covers fiscal policy and labour market policy. There also has to be pan-regional reforms to strengthen the banking system, which also includes pan-EU financial market regulation that works.
Most of all it needs to stoke economic growth. Otherwise the debt problems will persist. Unless EU leaders start grappling with these issues, then the prospects for the single currency and the European project over the longer term are bleak.
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