European Economic Government?
President Sarkozy has attempted to exploit alarm over the current financial crisis to generate a new push for an “economic government” in Europe. It is not clear what he meant and he rowed back following a rebuff from other states. But these events reveal much about what is really at stake in the Lisbon process and the intentions of the EU core elites. They reaffirm the cause for concern expressed by the Irish public and by politicians in East Central Europe.
Meanwhile, the EU’s seizure of the policy high ground while the United States is distracted by the Obama transition is taken a source of pride for many Europeans. They are tired of being at the receiving end of American policy. However, this attitude may also be based on false assumptions. The EU core, after all, has had a long stretch of economic stagnation, caused in part by over-regulation of the labor market and other parts of the economy. Ireland’s economic progress, and the future prospects for regeneration in Poland or Lithuania, have been based on promoting market forces and entrepreneurship. Some very selective regulation and coordination may well be necessary as a response to the global difficulties. But, if so, they must be seen as emergency measures for exceptional circumstances. The EU core, on the other hand, is intent on converting them into a new policy norm to be imposed on all EU states, including would-be market pioneers like Ireland, Poland and the Czech Republic. That could be a recipe for an even slower recovery and the diffusion of stagnation.
Europe should coordinate with the United States so that market-led growth can recover at the earliest possible opportunity. Taking advantage of American weakness to assert a global social democratic norm set is a short-sighted political adventure with potentially disastrous consequences.
