Intervento di Ernst Stetter, Segretario Generale della Foundation for European Progressive Studies, al Seminario di Italianieuropei e del Center for American Progress sulla Primavera araba e il futuro delle politiche progressiste

The Arab spring and the
Future of Progressive Politics

Seminar of Italianieuropei and the Center for American Progress

Rome, 1-2 December 2011

Roundtable

Will Spring 2012 be a season of progressive revival in Europe?

Ernst STETTER

Europe is facing one of the most difficult periods in its recent history. The current sovereign debt crisis is – so it seems– the crucial test of the solidity of the future of Europe and the ongoing journey of European integration since World War II.

The crisis has shown us two major problems of the economic and fiscal architecture of the European Union and the Euro. Firstly, a failure of surveillance instruments and secondly that the Euro zone does not seem to be able to face a sovereign debt crisis in one or more of its member states due to the lack of a solid crisis management.

However the crisis should also teach us that we, as progressives, have the responsibility to develop solid and effective responses in order to provide alternatives to the current austerity policies of the conservative governments in Europe. So it is also a question of a political Europe

The question arises if spring 2012 can give impetus into the European project and upcoming elections especially in France where we may be inspired for new hope and solutions out of the crisis.

In the last month we have seen changes in the political landscape across Europe. New “technical” governments in Greece and Italy, lost elections for the PSOE in Spain with the dramatic landslide victory of the right. On a more positive note, a change of government in Denmark with a social democratic female prime minister who will take over in spring 2012 the EU presidency.

Is this a first sign of a RENAISSANCE OF A PROGRESSIVE EUROPE?

Let us be cautious. In our cities, young people have taken to the streets, disillusioned with the traditional institutions of representative democracy. While some such movements have resulted in wanton destruction, others provide an alternative analysis of the functioning of democracy. Furthermore, recent years have seen a rise in support for far right political parties which operate within the parliamentary system but maintain a presence on its fringes. We need to re-examine the European party political systems

The future situation of European politics can change quite dramatically for the left in Europe as there are upcoming elections in several countries which have a high possibility of bringing success to the progressive family. I am talking mainly of France and probably Italy till summer next year. For my country – Germany – the next federal elections are only foreseen in 2013 but there is a probability of anticipated federal elections due the weak liberal coalition partner of the current conservative Merkel government.

Hence the question is rightly stipulated. There is a worthy possibility of a European progressive spring in 2012.

The renewal of Social Democracy and progressive policies was clearly high on the agenda of many of the discussions within the different political movements. But having in mind that there are possible changes in governments it is imperative that a sound reform of the European economic governance is brought in to solve first the sovereign debt crisis but secondly to give hope to the young generations for their future.

We all know that the crisis is more than a sovereign debt crisis in Greece. It is a profound crisis of Solidarity and Democracy in the European Union. In Germany, conservatives and liberals are stating daily in the tabloid press, that Germans should no longer be the “paymaster” of Europe; in France left wing politicians are urging a “De-Europeanisation”; in Finland the so called “True Finns” initiated discussions on collaterals and solidarity with Greece which have spread to the Netherlands and Austria and further.

The European Union has for too long needed to develop an economic and social answer to the sovereign debt crisis with a well-defined and thoroughly developed plan. I am wondering if the meeting of the finance ministers on Tuesday this week will be decisive for the stabilisation mechanism. Therefore, it seems to me that it is more than essential to reflect thoroughly also on the institutional setting of Europe, its decision making mechanisms and its rules on how we live together in Europe.

Federalism is an opportunity not a threat

One key point in this context: Europe needs to understand that federalism is not a threat but an opportunity. In an article in the New York Times, Nobel prize-winner Paul Krugman gave us a very exciting and comprehensive explanation of how to overcome the Euro Crisis. He explained why Nevada is different from Ireland in the context of economic and monetary crisis. Surprisingly, the answer is simple: Nevada is part of a solid federal system, Ireland is not!

Sharing sovereignty and giving responsibilities to a federal system is a means to ensuring long-term sustainability and welfare. The current political dispute over economic policy focuses only on the question of whether the more solvent members of the European Union, first and foremost Germany, are willing to accept a so called “transfer union“.

Yet the story of European integration is a story of giving away and sharing sovereignty. It is also a story of accepting the need to help the weaker in the interest of all, hence a question of solidarity. What about the structural funds? What about the Common Agricultural Policy? What about Enlargement? Or the principle of the Single Market? To be blunt, the European Union is already in practice a “transfer union”! It is a shame that this principle is now under threat.

European values and people’s needs

Is it therefore urgent to develop further on our common European values as progressives?

Yes – We are all aware that the current crisis raises important questions also directly related to the basic set of values of progressives. Is it not time to take this opportunity to cope with the free-market ideology, which led to huge income inequality, low levels of investment and a financial burst? Let us remind ourselves that financial markets must be considered as servants of the real economy, answering to people’s needs and aspirations which is after all the true reason for existence of an organised economic system. Financial regulation must be seriously undertaken and directed towards micro and macro counter-cyclical policies. Markets are not self-regulated entities.

They are social constructions which have always been by definition regulated on national and international levels. This goes together with more capital requirements for banks, strengthening the struggle for better legislation on alternative investment funds, and the need for a true European fiscal harmonization. One instrument should be the implementation of a European financial transaction tax. For example a 0,05%-tax on global financial transactions would raise a revenue of about 1% of nominal World-GDP per year! Only policies such as these can revitalize the economy and avoid regulatory arbitrage. Establishing democratic governance for a sustainable economy is the only way to reinforce the basic values of the progressives: social justice and solidarity.

Therefore, the Euro and the monetary union of Europe can only survive when those further steps are introduced. The need for a common fiscal and economic policy is evident and should have priority. This is not only a question of further harmonisation. This is first and foremost a question of willingness, conviction and commitment for Europe. The more convincingly we now answer “YES”, the sooner nervousness, disastrous speculation and panic will be over.

Yet it is clear that the road back to confidence, growth and stability is painful. Restructuring the European economies, reducing sovereign debt, undertaking effective savings in the national budgets is not easy. But it is all about a coordinated and well defined, coherent economic and social policy. And it is all about risk sharing in the Euro zone.

The best solution to share risks is common bonds or Eurobonds. Eurobonds would have the advantage that the entire Euro zone takes responsibility. It is not only that solid states like Germany are taking over all the risks together with higher interests. In the medium and long term, solid states will also have substantial advantages when sharing more responsibilities and solidarities. This is the idea of Europe: Being responsible, sharing together risks and also gains, in one word: to be “solidaire” and to support one another. Solidarity is the key to success!

Choices for the future of Europe

Unfortunately the European reality is regrettably darkening more and more. The chances for a profound reform of the treaties in order to overcome the crisis are nearly zero. So what is required are pragmatic short and medium term solutions. Proposals are on the table, such as for example binding national budgets with common agreed social standards, with obligatory investment plans for research and innovation as well as for education and definitely mandatory rules for the financial sectors in the different member states.

Such choices are then the best pathway for further answers, similarly as are European sovereign bonds and more regulation on the financial markets, such as the financial transaction tax. A real sanctions mechanism should then be implemented and voted in the European Parliament and afterwards approved by the different national parliaments, paying special attention to not adding new elements of pro-cyclicality in the system.

Such proposals could be helpful to fade out the risks of further divisions within the European Union. The greatest risk for Europe is national egoism and weak spiritedness. Successful European integration was always a story of bravery and leadership. Postponing necessary decisions and not taking risks for Europe is hazardous.

Public interest needs regulation of private activities. The goal is then to re-align private practices with public interest, and this is precisely the role of a democratic state. In this respect, without discrediting a free market economy, it seems urgent to re-assign the need for regulation with respect to economic stability and public interest. Against all views presented in the last quarter of the last century for supporting economic liberalisation, a good economy is first and foremost a democratically regulated economy with respect to private economic forces but also towards the public interest. This would necessitate however to convince citizens that the pursuit of profit maximisation can be destabilising, if not regulated by democratic institutions. Indeed, restoring space for public intervention in economic affairs necessitates democratic support; here lies one of the keys towards a redefinition of our welfare systems and social policies!

Towards a progressive spring 2012 !

We should be honest with ourselves. In the past twenty years, social democracy was not able to fulfil the commitments of equality, social justice and solidarity; it was in many of the European social democratic parties considered as a secondary issue. Social Democratic parties have moved away from its members and have been contradicted by the economic and social crisis which we are witnessing.

Indeed the “Third Way” argues that political power may only be organised under coalitions formed occasionally. These were rather ad hoc and not based on a structured majority usually linked with social classes. The “Third Way” tried to win over the middle-classes, which functioned for a certain time, but this approach clashed with the traditional left wing values. In the end a compromise between a more financialised capitalism and the welfare state was not possible. The financial markets rejected the principles of the welfare state and Europe has seen a considerable increase in inequalities strengthening the financial character of the economy.

Fortunately today we are witnessing, to a certain extent a rehabilitation of the concept of the state. The financialised capitalism is questioned ever more. However the state is still weak. Consequently the participative traditional democratic structures are being questioned by those who are suffering the most from the crisis, the unemployed youth.

That is why we as progressives have to take the recent movements like the “Occupy Wallstreet” or the “indignados” more seriously.

 

The European project should be at the core of our thinking

These are some thoughts on how to re-think on progressive policies and the crisis in Europe.

The European project should be at the core of our thinking. We have to develop solid policies for the future well-being for our citizens. This is a time to move ahead. The frame to think in is that a new progressive European vision with a new set of values and policy principles is needed.

Parties, think tanks, civil society, and trade unions, all actors are equally desired in this debate and equally responsible to place in the heart of common debates what people can expect in Europe. Unless it becomes a part of the public exchange, it will remain a theatrical play, of a socialist “Night in the Museum”; dramatic and entertaining for the ones inside, unnoticeable for the rest of the world.

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