It is a pity that the Government-friendly media is so heavily engrossed in shoring up GonziPN during this unofficial electoral campaign, that rather than going into the merits and demerits of the recent EU Summit some – not all – were far more interested in highlighting Dr Gonzi’s personal stamina and resilience during this meeting.
The same usual suspects equally seemed far more interested in praising RCC for his pivotal role in the Air Malta deal rather than in tackling the issue as to whether it was tantamount to a fair deal or not.
But back to the Summit itself.
As the Social Democrats and Progressives have been arguing all along, particularly since the election of the French President and also in sync with what the IMF has been strongly urging the EU to do since early this month, the outcome of the Summit made it clear that Europe needs comprehensive action to revive growth.
Unless it does so – as the IMF pointed out on 18 June – it will be virtually impossible for Europe to break the vicious cycle that keeps many countries stuck in crisis mode – the feedback loop between weak government finances, weak banks and weak growth that continually undermine each other.
Although the IMF is not the best source of recipes with a social conscience, it made an interesting point, in the sense that large-scale reforms could boost GDP by 4.5 per cent over five years: no mean feat, even if such a target were to be only partially met.
What is even more interesting is that the IMF did not rely merely on reforms but also made the point that, since demand is uneven across Europe, any reforms needed to be complemented to sufficiently boost growth in the short term.
It was with all this in mind that it urged policy makers to supplement them with policies to promote demand: external in some cases, internal in others.
The bottom line is as follows: the lowering of unemployment levels is needed urgently, and growth is the only secure route to accomplish this.
I have personally long been arguing that summits tend to fall into two categories: those that merely pave the way for other summits and those that, although ostensibly offering quick-fix solutions, are in reality part of an ongoing process with long-term goals in mind.
I have no doubt that, while the German Chancellor made some concessions much to the relief of her eurozone counterparts, she has still left herself plenty of room to manoeuvre.
After all, bailing out feckless banks without adding to the debts of respective governments might in the long run prove to be a relatively small price to pay, if the long-term objective remains fiscal union and even a much stronger political union.
It cannot be forgotten that when German reunification took place, many Germans, including eminent SPD members I knew, thought it was still unthinkable.
But at the end of the day, the political objectives prevailed over the economic criteria, even though for a number of years Germany had to pay a stiff economic price for the daring and radical political decision that it took.
I am deliberately drawing such parallels because everything needs to be seen in its proper perspective – amongst which is the fact that on 1 July the EU Presidency was being assumed by a friendly country – Cyprus – that only hours before doing so learnt that it needed a bail out of more than half of its own GDP.
In spite of cosmetic make-up to improve the overall look of that country, this Mediterranean neighbour of ours has evidently lost most of its resilience, while some have even gone to the extent of claiming that its once robust economy has well and truly hit the rocks.
To my mind, the biggest achievement of the Club Med countries at the recent EU Summit – where, I am reliably informed, Malta played only a marginal role although Joseph Muscat did well to support the cautious and prudent approach adopted by the government – was that people like Monti sought a change in the EU’s direction. And, to more than a certain extent, they achieved it – against all the odds and particularly since, as Monti himself put it – the eurozone’s mental block had been broken.
On the other hand those who think that Ms Merkel has given up the right to impose strict conditions on countries using the bail-out funds must be living in cloud cuckoo land.
The fact that recriminations are still going on is more than indicative, not only as to what has really been agreed in the Summit but also over who emerged as the real winner of this so-called crunch summit.
The lesson that also needs to be learnt is that the example of Greece has shown that even strict and detailed austerity measures – particularly when not adequately enforced – do not really help truly ailing countries, particularly when they lack the will and the ability to implement them – with particular emphasis on the words WILL and ABILITY.
For our part as a PL, not only did we agree with the importance of a cautious approach to the proposed fiscal union but, as Joseph Muscat argued in Mellieha last Friday, Labour could never agree with such a union if it meant that the country would not be able to decide about direct taxation in Malta.
“This is a concept we have to defend, since taxation issues in Malta should be decided by the Maltese and not by others.”
The issues at stake are not just about sovereignty but also about the preservation and enhancement of our own competitiveness.
In a true non-partisan mode, Muscat argued that to allow the EU to decide such issues for Malta would be to undermine the economic model that has been so successful, such as in the financial sector.
Ironically, last week the PM said that he did not agree with the Council of Ministers’ recommendation to increase the pensionable age once again.
When this recommendation was made, in June 2011, Dr Gonzi had kept mum and had it not been for our party bringing the matter to the public’s attention, no one could have been blamed for thinking that the government was prepared to tow the Brussels line.
In fact, through its original silence – possibly triggered by the fact that elections were still further away than they are now – the government had risked undermining its own position by not making such a stand immediately clear.
But, as the saying goes: “Better late than never”.
Let us hope that the ray of light for Europe that was mainly offered by southern European countries and some undoubted prodding by both the IMF and the USA itself – for their own different reasons – will help put the EU back on track, help save the euro and keep the euro project going without risking being derailed.
After all, the euro is our own currency and not just any other currency. So we should have every interest in ensuring its survival.
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www.leobrincat.com
Leo Brincat is the Shadow Environment Minister and a
former Finance Minister