There is one more shock that may be in store for the European Union plunged in systematic crisis. September 12 is the day of snap parliamentary elections in the Netherlands. In terms of importance the outcome exerts influence far beyond the borders of just one country… The left oppositions’ victory will deliver a heavy blow against those who stand for rescuing the «problematic» EU members at the expense of more prosperous ones. Then the «Northerners» will lose an important ally in the «North» against the «South» stand-off. No fewer problems would be caused for Brussels by strengthening of the radical-nationalist Party of Freedom led by Geert Wilders.
There are two opposing camps emerging in Europe. One includes the so called «problematic» countries of Mediterranean along with agrarian Ireland. They go on plunging deeper into budget-debt crisis. Not without substantiation they put the blame not on national governments only, but on «world backstage» represented by bankers, manufacturers and heads of leading European states as well. The «Southerners» think the last ones provoked the crisis on purpose in order to use speculative «bubbles» and multibillion programs for making profit.
This bloc is most staunchly resisted by northwestern «troika» including Germany, the Netherlands and Finland. They criticize the southern EU periphery for social prodigality saying it doesn’t want to live within its own means. German Chancellor Angela Merkel is sure the way out of crisis is toughening budget discipline. The Dutch Finance Minister Jan de Quiche Yeager is even more resolute. He believes no concessions should be made to Greece and its partners plunged into financial distress concerning «budget cuts». [1] Finland’s Foreign Minister Erkki Tuomioja has already acknowledged his country has no great illusions concerning the fate of Greece and Portugal; it has even worked out a separate plan of actions in case of Eurozone’s collapse. [2]
Not so long ago France was among the advocates of tough measures aimed at saving euro. But the loss of presidential election by Nicolas Sarkozy this spring made the first big breach in the «northwestern» coalition. As soon as François Hollande appeared in the Elysée palace he said the main thing on the way out of crisis was not «belt tightening» but rather increase of investments into industry and infrastructure. Besides, he believes it is necessary to share the «Southerners» burden by all members of Eurozone led by Germany. Now in case the ruling center – right coalition led by Prime Minister Mark Rutte’s People's Party for Freedom and Democracy suffers a defeat, the correlation of forces within the whole European Union will radically change. According to the polls released by national institute Ipsos Synovate the opposition Socialist Party is going to make big gains. It can get 30 seats now in comparison with 15 it received in 2010. True the Liberals may gain but only up to 34 seats from 31 they have now. There are 150 seats in the Dutch parliament, so the result presupposes tough bargaining with the Freedom Party. It has 24 seats today and hopes to increase the number.
State expenditures and the relations with the EU are the main issues dividing the Left and the Right in the Netherlands. The Rutte government insists on continuation of tough budget policy in order to cut the budget deficit from 4,7% down to 3% in 2013. To the contrary the Socialists promise to invest additional 3 billion euros into economy during the same period. They are confident the measure will facilitate production and allow the reduction of state budget deficit to the very same 3%. Talking about the relationship with Brussels charismatic Emile Roemer, one of the Socialist Party leaders, proposes to put the issue to national referendum. He believes it’s only up to the people to decide on any authority delegated to the «Brussels technocrats». AFP emphasizes the Socialists’ euroscepticism is not gone too far from the views of Geert Wilders who advocates abolishing the euro. André Krowel, a political scholar from Free University Amsterdam, defines the crucial moment for the Dutch and other Europeans saying the electors demand clarity on the issue of to what extent the eurocrats are authorized to take decisions on what’s taking place in a country and to what extent people can solve the issues themselves. He asks who defines what the state budget is going to be like. The Hague or Brussels? Or, perhaps, Berlin or Paris? This question may become rhetorical.
The Left victory will not only strengthen the European trend to the left started in France this spring but will also make Angela Markel think twice. 2013 is the year of general elections in Germany; the outcome may finally change the correlation of forces in European Union putting forward new slogans, values and guidelines.
At once three states have let know recently they have no intention to connect their future to Eurozone. Radoslav Sikorsky, Polish Minister of Foreign Affairs, defined this stance in the most tough way saying Poland should join the Eurozone only if the government can tell its people it’s safe. By and large the statements along the same lines were made by the leaders of Bulgaria and Lithuania. All the three states have decided to put off the switch from national currencies to euro. President of Poland Bronislav Komorovsky clearly tried to point a finger at West European states while opening the international economic forum in Krynica. He said the ongoing debt crisis defined a new line of division within the European Union between the states that are able to fight and those whose courage didn’t last long. Apparently Poland and its East European partners belong to the first ones, while the European «heavyweights» are in the second group refusing to come to their aid.
The last state joining the Eurozone is Estonia. It happened in 2011. Since then the common currency space encompasses 17 EU members out of 27. Euro is freely used in a number of other territories, for instance, in Montenegro or self-proclaimed Kosovo but it doesn’t change the gist of the matter. Actually there are two spaces in Europe today – big political and more limited financial-economic. Obviously they don’t strive to become one whole. It happens due to the deepening crisis of Eurozone that actually that has already launched the «domino effect». Even normally restrained Mario Draghi, the head of European Central Bank, had to say his agency lost control over the borrowing costs in Eurozone. At closed hearings in European parliament he acknowledged that the bank couldn’t achieve financial stability because the Eurozone was fragmented and the interest rates changes were related only to one, at most two countries. The situation in other states of Eurozone was nor important according to Bloomberg.
The speculative cost of state debts and other financial instruments of the «problematic» countries is, probably, the major threat for EU economies. The process widens the gap between financial capabilities and leads directly to financial default. It happens when a government declares its failure to comply with financial obligations. According to the poll by the Financial Times, 26% of Germans believe that the most heavily suffered Greece wouldn’t be ever able to pay back the international financial aid. There is a bit more optimism In Italy and Spain, the countries facing the same problems. 77% of Italians and 57% of Spaniards believe better future is in store for Greece. It’s rather a feeling of «crisis» solidarity. Anyway over a half of French as well as Germans believe the Greece default is a matter of time. [3]
Mario Draghi is sure the only way to change the situation is to buy out «bad» state obligations. He says that, frankly speaking, it all has direct relation to euro’s existence. On September 6 at the wrap up session of the board of directors meeting Mario Draghi declared the intent to buy state obligation of Eurozone’s «problematic states» (first of all Spain and Italy) but on tough conditions.
It gives rise to new questions. First, how could Germany and its allies, faithful to tough budget policy, be convinced to pay in common European currency for debt obligations of the same Greeks or Portuguese, for instance? Second, will the Central Bank resources and European anti-crisis funds be enough to buy out securities, first of all the Spanish and Italian ones? It’s exactly what gives rise to anxiety among EU financiers and world market players. If the yield surpasses 7%, then the Central Bank will have to intervene. According to AFP, Alvin Cheng, associate director of Prudential Brokerage Ltd., said economic indexes were weak everywhere and investors continued to pin their hopes on stimulus measures taken by global central banks.
But will an intervention by European Central Bank help, will it not be late – that’s what nobody knows today. It is timely to recall what happened at the 1955 conference in Italian Messina devoted to preliminary discussion of the principles the European community was to be built on. A British representative literally told his colleagues that the future agreement under the discussion had no chance for being commonly approved, but if agreed , it would have no chance to be brought into life, if brought into life, it would be unacceptable for Great Britain. He said goodbye and wished them all well.
It is no secret London traditionally takes advantage out of European internal contradictions. Talking about the British European policy, prince Alexander Gorchakov, Russian Foreign Minister in XIX, said that England was concentrated on its own egoistic interests. There is a more «fresh» definition by former German chancellor Gerhard Shroeder, who said that at the beginning of his tenure he supposed the German – French relations could be added by the British component creating kind of a triangle. It happened to be an illusion. In the foreseeable future no special interest in European processes should be expected from Great Britain. To the contrary this country would try to establish itself as a mediator in transatlantic relations even to the detriment of European unity.
In theory the European Union is able to cope with debt crisis but the geopolitical blocs (in particular British-USA and French-German) will not vanish in the hays. Each of them will continue its policy in Europe and beyond – even to the detriment of the European Union’s unity.
[1] Reuters 1215 220812 GMT
[2] The Economist 23.08.2012
[3] The Financial Times, 03.09.2012
