The EU has drawn its lessons from the euro crisis, says EU expert

The recent currency crisis has taught the European Union important lessons about the need for political and monetary cooperation and for public debate, within and among its member states.

It is only through active discussion that the idea of a united Europe can manifest itself and find support. Now that the EU has developed and successfully implemented various tools to fight the crisis, it can finally benefit from its strengths. These were the main ideas Baron Frans van Daele presented on Monday 22 April at Maastricht University, during a lecture entitled “The Euro, the Union and Europe: the two years ahead”.

Having served as Ambassador to Italy and the United States, representative for Belgium to the EU, the UN Security Council and NATO, Chief of Staff at the Belgian Ministry of Foreign Affairs and Chief of Staff of the President of the European Council, H. Van Rompuy, Van Daele has made a notable contribution to EU policy building throughout his career and developed a rich insight into world politics.

He started the lecture by skillfully outlining some of the key policies of the monetary union, their weaknesses and potential. Most of all, he called on the skeptics to overcome their disbelief in the future of the Union, arguing that the EU had not only managed to make its way out of a severe crisis, but was also already applying the lessons learned from it.

He regretted however the insufficient level of dialogue between national parliaments and the European institutions and said that EU member states could benefit from making better use of “the greatest advantage of being part of such a political, economical and social community, namely to exchange experience.”

Baron Frans van Daele

Deeds and commitment

Van Daele’s main message was clear from the start: deeds are what counts. He made his point by highlighting Germany’s contribution to Europe when it overcame its uncertainty about the reunification process after the fall of the Berlin wall. Van Daele said that the distrust disappeared “overnight” when the German Chancellor Kohl announced that he would relinquish the Deutsche Mark in favour of the common European currency. His decision was seen as a very strong set in favour of the idea of a currency union, even if as it later became apparent, “one man does not make a team.”

A community project, to which the majority of the parties are unwilling to fully commit themselves, is almost inevitably doomed to fail. The euro zone project was no exception, commented Van Daele.

After a number of member states rejected the idea of an Economic Government, preferring to keep their power and autonomy in the decision-making process with regards to national affairs, the EU adopted a combination of budgetary and monetary measures as an alternative solution.  This was the first bad compromise solution made by the Union, Van Daele explained.

When the US crisis reached Europe and the stability of the EU was put to the test, it was clear that these measures had failed at imposing political and fiscal discipline.

Lessons learned

Although it took the EU long to handle the crisis, it eventually proved to function efficiently in critical situations, said Van Daele. With so many parties and pressure involved, reaching a consensus on common policies was difficult. To handle the recession, the EU implemented a twofold approach, first by restoring stability, and second by developing new regulations and intervention tools. Van Daele said he was confident that the EU now disposes of a good crisis management programme and that this was proved it in its recent handling of the economic troubles in Cyprus.

Strong anti-crisis measures, however, come at high social and political costs, as demonstrated in Italy and Greece. “Austerity was inevitable and affected everybody,” Van Daele said, “and for the troubled countries in the South, the consequences were naturally more severe than for the northern member states.”

The resulting social tension created a fruitful ground for populist parties, and that, Van Daele argued, should motivate the EU even more to return to “growth and jobs”.

Regarding the redistribution of power across the EU caused by the currency crisis, Van Daele warned against “too quick and hasty” conclusions. “Who is in charge solely depends on the circumstances,” he said. In his view, the ongoing shifts of power from one state to another in different situations are to be interpreted rather as a proof of the flexibility of the European political system than as a power struggle.

He also emphasized the importance of flexibility within the euro zone. Van Daele argued that euro zone members could only benefit from more room for maneuver.

Despite the widespread criticism about the lack of democracy in the EU, for Van Daele it is the lack of communication among regulators and member states that hampers the system from operating efficiently. “There is a big gap between the top – Brussels and Frankfurt – and the bottom – the member states’ own parliaments,” he said.

The former diplomat further criticized the passivity of national politicians in the EU decision-making process as one of the weaknesses of the current setting of the Union. “To improve communication, [national politicians] need to engage themselves more in the work of their representatives at the European level,” he said.

Van Daele was confident however that EU member states could overcome all forms of instability if they worked towards mutual integration. After all, the power of every community lies in the joint effort and shared experience.

By Darina Bacheva

Darina Bacheva is a master’s student in Financial economics at Maastricht University.

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