sabato 24 novembre 2012

Why Europe is split into two or three

Another hard week for Europe, after Eurozone countries refused to disburse Greece 31 billion Euros loan. On Thursday, EU leaders met in Brussels for a two-days meeting on 2014-2020 budget.  

What came out from the summit was once again the idea of an European Union struggling to find agreement among its member states. If one wanted to speculate, it could be said that EU summit failed, as many newspapers all around the world did. Is that true? 
In times of crisis it is. But there should be no surprise that in their first round EU leaders did not reach an agreement. In fact, there has always been an exploratory meeting in order to understand each country position, which is usually followed by an official summit where leaders agree on the budget. What's new then? 
First of all, the fact that a budget increase - as always happened - is not affordable anymore. Secondly, this was the first time a 27 countries EU budget is likely to be approved, in a situation where more European integration is far to be reached. From now on, it will be harder and harder to find unity on important matters, if things do not change. Actually, there are two or maybe three Europes:
1)Northern European countries such as the UK or Germany which are net paymasters,asking for at least 30 billion of cuts and more control over the budget. EU institutions should adjust to the real world, David Cameron said, playing UK traditional Eurosceptic party pooper role in the whole negotiation;

2)Southern European countries such as Italy or Spain - the first being one of EU big contributors - which do not want to see reductions in the budget, especially in the areas of cohesion policy and CAP, which at the moment seem to be safe from further cuts;

3)Eastern European countries such as Poland or the Baltic ones which are major net beneficiaries and less contribute to the EU budget. These countries, likely southern European ones, complain about cuts in agriculture and cohesion policies.

Angela Merkel believes an agreement is likely to be reached at the start of next year, while EU Council President, Herman von Rompuy, is already working on a new budget proposal. However, it is still hard to say if the budget will be inspired to Europe current needs: control, of course, but also growth and solidarity. In fact, if something failed yesterday, it was the spirit of union between northern rich countries and the poorer south and east.

No surprise that in the very same day budget talks concluded, Draghi warned that the European Central Bank action had prevented a credit crunch. Also reminding the necessity of a bank union and cooperation mechanism, namely more integration, which is EU real need.


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