Michele Marchi - 19/06/2012

     Obviously the outcome of the Greek vote on 17th June was largely obscured in France by the analysis of the second round of legislative elections. The Socialist victory offers François Hollande all the tools not just to reform the country, but also to perform, at least in theory, a leading role in the attempt to solve the Euro area crisis. That’s why the French vote and the Greek vote have been interpreted as a “common breath of fresh air”, as a “double injection of confidence” in view of the decisive upcoming Europe summit in late June.

     The success of the Greek conservatives and pro-Europeans of New Democracy is an important trump card for Hollande, who among the heads of State and government of the Euro area countries is the one with the firmest and most recent electoral legitimation. Moreover, he can count on the semi-presidential institutional set-up which offers the chance and the autonomy to the occupant of the Élysée as happens in few others systems. Undoubtedly the hypothesis that the leader of New Democracy Samaras will manage, perhaps with the support of the PASOK MPs, to form a national unity government ready to accept the rescue plan of the troika has led to a momentary “sigh of relief” on the part of the whole of the French banking system.

     We should not forget that, although in the past few months there have been numerous attempts at separation, the French exposure in respect to the Greek debt is the largest among the European countries. There is talk of around 35 billion euros, subdivided by three quarters with the exposure of the banks and one quarter by the public debt held by the State. Faced with this scenario, even if some commentators have not withheld criticism towards Samaras, who converted too quickly from the most accentuated nationalism (in 2009 he had attacked Papandreu severely while he was discussing the first aid in Brussels) to a pro-Europeanism finalised to the implementation of the rescue plan, the outcome of the Greek vote is considered to be a decisive passage, even more so than the recent Irish referendum.

     As did the markets which, after positive openings, soon dipped, even if in Paris they seem sure that the Greek vote is not enough. In the sense that the outcome of the Greek vote is just the starting point, but for the turnaround everything is put off to the European Council in Brussels on 28-29 June. And in particular this summit could be a success, even a partial one, only of Paris and Berlin really do decide to get a handle on the situation. This first of all implies closing every polemical debate on the lines of that of the past few weeks. Archiving Merkel’s declarations addressed to the Prime Minister Ayrault, accused of being the bearer of a “simplistic” vision.

     But at the same time avoiding the “slips” like that of Montebourg who spoke recently, in regard to Merkel, of “ideological blindness.” In the second place having closed the French and Greek electoral parentheses, Paris and Berlin should abandon their respective Manichean visions about the ally. Merkel should accept that Hollande really wants to take his distance from Sarkozy’s rigour and suggest his own alternative way to development. On the other hand, the Élysée should stop believing that Merkel is isolated at home and on the contrary acknowledge the fact that nothing can be modified at the European level without Berlin’s go-ahead.

     Ultimately, Paris and Berlin should clarify their recipes for the future of the Euro area and that of the Union, so as to then search for a complicated, yet essential synthesis between the two proposals. At the moment the distance between Hollande and Merkel seems hard to bridge. The Pacte pour la croissance en Europe recently drafted by the sherpas of the Élysée puts the revival of growth before any analysis of the Union. The text is vague as to the institutional modalities for enhancing the monetary union and it speaks of a road map to be established already at the late-June summit but that will have to unfold over ten years.

     Even if Berlin has not yet formalised its viewpoint, the most important factor has for some time been elaborated: upstream to ant financial solidarity and communalising of the public debts there must be a political union and as a consequence a severe limitation of national sovereignties. In short, Berlin will accept the communalising of the public debts only if each country will control the budgets of the other countries. Merkel’s proposal, ultimately, is the same as that of the Schauble-Lammers pair in 1994 and Fischer in 2000: that of the European Federation led by Germany. That of 2012 seems to be the last call: if Paris again waives political union, Berlin will again say ‘no’ to financial solidarity.

     The Greek vote, in this perspective, has only been a “pain-killer,” even if essential. in Brussels, or rather in Paris and in Berlin, the fate of Athens will be decided, but also that of Madrid and probably Rome. The choice is clear, Berlin seems to be stating: solidarity will only come in exchange for sovereignty. The same national sovereignty that the Greeks, in spite of the continuous electoral phases, have only held formally for some time now.

Michele Marchi
(University of Bologna)