11th August 2011, The Euro zone cannot be reduced to intergovernmental cooperation

After the Euro zone summit on 21st July, the President of the Republic wrote to the national parliamentarians. Nicolas Sarkozy's concern to remain in line with the German authorities and his desire to associate the national parliamentarians with consolidation of the Euro deserve to be praised: Germany is an essential ally for France and the national Parliament has an important role to play to ensure that France's commitments concerning budgetary discipline will finally be respected. However, neither the "Franco-German relationship" nor national institutions will be enough to assert the political legitimacy of the Euro zone. The method favoured by the German Chancellor and Nicolas Sarkozy raises three major problems.

Firstly, this method is not effective in the face of the crisis. Contagion is gaining ground, now effecting Spain and Italy. The plan, adopted at the end of July after lengthy negotiations, contains positive elements, for example the rights given to the European Financial Stability Facility (EFSF) to act on secondary markets. However, due to the fact that these acts must be approved by 17 national parliaments, the EFSF cannot act immediately, in spite of the worsening of the situation after the deterioration of the American credit rating. Hence, the obligation of the European Central Bank (ECB) to play a role which it was never intended to play, which could prove dangerous for its credibility.

By opting for the intergovernmental approach, Mr Sarkozy is restricting the Euro zone's capacity to react. He is asking third parties to believe in the Union, while sanctifying disunion. It was never the vision of the founding fathers of the Euro that we remain at this stage.

This method is not more convincing if it is a question of endowing the Euro zone with an economic policy. The juxtaposition of national policies favours disaccord. It does not resolve the specialisations inherent in a monetary zone. The Euro needs common policies. In this respect the "Franco-German relationship" is currently broken: France is undermining the freedom of movement (Schengen), which creates obstacles to workers' mobility, Germany makes its important energy related decisions independently. The two countries are fiercely opposed to establishing a European budget worthy of the name and also to the joint issuance of Eurobonds, which in contrast would be much more effective than rebuying bonds on the secondary markets.

Nicolas Sarkozy advocates the coordination of national policies, whereas the last ten years have clearly shown its limits: the national governments of multiple Member States (of which recently France was one of them, and even Germany in 2003) have not felt obliged to respect their engagements concerning budgetary discipline, nor by the European strategies intended to increased competitiveness in the European Union.

By proposing "true economic governance for the euro zone, whose central element will be the meeting of heads of state and government", the President is asking us to place our trust in those who, in their flippancy, are largely responsible for provoking the crisis of public finances and for failing to create growth. The conclusions from 21st July go in the right direction, with the "Marshal Plan" for Greece or the embryo of common fiscal policy, but, if the methods applied do not change, these initiatives will join the long list of wishful thinking by the European Council.

Finally, the method adopted poses an important question of legitimacy. How could Europe, the birthplace of democracy, settle for a "government" which was not elected as such, which would elude all forms of public debate and which would not be monitored by any opposition forces?

Such ersatz surely does not deserve this name. Even if each government of the Euro zone is legitimately elected and accountable in front of its national parliament for its national policies, it has no explicitly European mandate concerning general interest.

The German philosopher Jürgen Habermas, along with the Indian economist Amartya Sen, have both denounced the anti-democratic drifting of a Euro-zone reduced to intergovernmental cooperation. Both the respect of social partners, and more generally of civil society, should also dissuade taking this path. The risk of injustice would be even greater if the European Council followed a censitary logic: it is the richest Member States - or those best rated by credit rating agencies - which impose their opinions on others. What is currently happening in Italy should cause us to pause and take stock: if it is normal that the European partners demand reforms in return for their help, the joint letter (not published at date this article was published) from Mr Trichet and Mr Draghi, dictating a programme for government to Rome, including details concerning procedures and the timeframe, will spark sharp reactions in Italy.

In this form the "governance for the Euro zone" could well be either inefficient, if it once again adopts a list of good intentions, or illegitimate and dangerous, if it imposes an authoritarian board. What the Euro zone needs, is for democracy to be progressively developed, beyond national borders, based on supranational institutions and transparent rules. This was the project as conceived by the founding fathers of the Euro. And even...the mothers and fathers of the Treaty of Lisbon.

It is quite ironic that the President of France completely omitted any reference to the European Parliament (EP), despite the fact that because of the Treaty of Lisbon, conceived following his proposal of a "mini-treaty" in 2007 and drafted under Ms Merkel's presidency, European economic governance is no longer the sole competence of the Member States but is subject to co-decision (EP, Council, European Commission).

Governance of the Euro has already been studied in-depth in the European Parliament. Six texts (on-going co-decision procedure) foresee notably a reinforcement of discipline, with special measures for the Euro zone, and much stricter macroeconomic surveillance which should, for example, allow private indebtedness, the balance of payments or labour unit costs to be controlled. The European Parliament is committed to accompanying this increased mutual control by a more profound public and democratic debate (economic dialogue with the ministers of finance, cooperation with the national parliaments via the European Semester).

At the end of June, two Member States prevented an agreement being reached between the EP and the Hungarian Presidency: Germany, which continues to want to exclude surplus countries from macroeconomic surveillance, so as to escape surveillance themselves, and... France, which rejected the demand from the EP - supported by the ECB - that alerts issued by the Commission to Member States on the brink of violating the Stability Pact be adopted automatically.

Who would have faith in a Highway Code where the assessment of traffic offenses is entrusted to a sovereign motorists' association rather than to automatic speed cameras?

Europe needs initiatives at the national democratic level, such as the Franco-German ones, which serve the European general interest. But Europe also needs Europe. The ambition of France, the country where the European Commission was conceived and where the European Parliament has its seat, can not entrust the Euro to an incarnation of the League of Nations.

By Sylvie Goulard, MEP for the Alliance of Liberals and Democrats for Europe (ALDE)

Published in Le Monde on 11th August 2011