A large loan for growth is certainly necessary but not sufficient

June 4, 2012 7:18 AM

A large loan for growth is certainly necessary but not sufficient

The negative outcome of the French and Dutch referendums makes now almost impossible path towards ratification of the European Constitutional Treaty, despite the Luxembourg "Yes". It is the economy that should now restart to restart the process of unification, by giving the means to raise potential growth, effective growth and hence employment in the euro area.

Must be, first, promote a coordinated investment plan aimed at closing the infrastructure gap, in many countries of the Union, was the result of the restrictive policies needed to meet the Maastricht criteria until the creation of the euro area, then the stability pact commitments then.

Second, it must commit to carry out a plan, to strengthen the competitiveness of European production in agreement with the prospects opened up by the European Council of Lisbon of March 2000. This plan should in particular include:

of investments for the completion of the European networks in transport, energy and telecommunications sectors, taking account of new requirements since the enlargement;

a plan of research and development and promotion of higher education to strengthen the competitiveness of Europe in these vital areas;

Public and private investment in advanced technologies to promote the formation of European champions in the high-tech industries;

funding for a series of projects to improve the quality of life of citizens of the Union (sustainable mobility, purification of water, renewable energy, new sources of clean energy, etc.);

investment to ensure the conservation and promote the use of cultural assets and natural resources.

The financial burden of Lisbon should be shared between the national budgets, supervised by the revised Stability Pact, and substantial Community funding. However the European budget is not only a limited size, it is also absorbed in large part by agricultural expenditure, and the disastrous outcome of the Brussels European Council last June clearly showed the impossibility of a radical revision of its composition in the short term. Pass this budget of 1 to 1.3, or 1.4 of Community GDP would be feasible only if the addition is really used to fund future expenditures. But, in any event, we are far away.

In this context, a road in the short term would be issuing the "Union bonds", i.e. of obligations to the Union, which would be covered by the guarantee from the Community budget, to finance the Lisbon Agenda. In view of the reputation of the Union on the world market and the current strength of the euro, these obligations may be issued with a low interest rates and contribute not only to strengthen the European financial markets, but also to promote the financing of the European plan of development through the attraction of a large slice of the world's savings which currentlyfault of valid alternatives, still turned to American financial markets.

Ultimately, it is to apply the so-called golden rule (golden rule) not step in each member country but at European level, to the extent the investment needed to achieve the Lisbon objectives would be financed with the loan, by imposing, at the same time that each Member State is guarantor of compliance with the commitments of the stability pact.

In this context, investment in infrastructure could be financed via the EIB (European Investment Bank) in partnership with private investors. With regard to expenditure on R & d and higher education, and other interventions foreseen by the Lisbon Agenda, all States members of the Eurogroup should each designate a "responsible for Lisbon. Too few of them have done so far. A portion of the funding should, in any event, be the responsibility of each country (to finance the poles of competitiveness in France, etc.), then that debt would only partially dependent on national budgets because the interest on the "Union bonds" would be covered by the budget of the Union.

A large loan for growth is certainly necessary but not sufficient. The resumption of the process of political integration is essential to pursue the path towards a multipolar world capable hand to promote peace with the use of all resources of "soft power" which Europe has, and the other to ensure the Union the necessary authority to govern with success the European economy, program development in the areas related to the influence of Europe and negotiateon an equal footing with the United States and other regional areas, a plan of sustainable development of the global economy.