Rarely has an election resonated so widely across the European Union as the French presidential ballot has done. Rarely has a leadership change in one EU member state created expectations of a real policy shift.
Remarkably, a new European demos and public sphere are emerging from the economic crisis. Europeans are recognising how interdependent they are. One country's failures can threaten the entire European economy, and can call into question the fruits of 60 years of integration. Peace, solidarity, and prosperity are not irreversible achievements; only 27 countries working together can guarantee them.
François Hollande's victory is a fresh chance for Europe. It should spell the end of a policy oriented exclusively towards austerity, which has paralysed our economies and divided the EU. The new French president's commitment to a European growth policy has brought hope to citizens, and should not alarm anyone - certainly not the financial markets.
Hollande's plans for a growth initiative fall on fertile ground, especially in the European Parliament, which has repeatedly called for such measures. I am delighted that this message is increasingly echoed by the political mainstream, including most recently by European Central Bank President Mario Draghi. Likewise, the European Commission is working on a 'growth pact' to be discussed by EU leaders in June. Indeed, Europe needs a master plan to avoid a tailspin of recession, growing unemployment, and weakening banking systems.
A new master plan for growth would not be about printing money. Fiscal discipline remains essential, as are deep structural reforms. The growth pact can be properly financed by new sources of revenue, such as a financial-transaction tax and joint project bonds for infrastructure investment, or by curbing tax evasion and tax fraud and eliminating tax havens, as well as by more efficient and intelligent use of structural funds.
What is to be done? First, targeted investment should be given priority. The European Investment Bank would be a good vehicle - in addition to new project bonds - to boost spending on major infrastructure projects (for example, in the energy sector). The EIB could be given significantly more resources to boost its loan programs. In the longer-term, we should revisit the idea of joint Eurobonds.
Channeling EU structural funds towards innovation is essential, given that spending on research and development is alarmingly low compared to our global partners. Fundamental reform of the Common Agricultural Policy should not remain a taboo. Indeed, the CAP is ensuring neither sustainable agriculture nor decent incomes for all farmers. Undoubtedly, tough negotiations lie ahead on this front, including with Hollande.
Second, young people must be a top priority. Our responsibility here is twofold: to put growth back on track, but also to respond immediately to the human tragedy that has hit our youth. The eurozone's unemployment rate, at 10.9%, is at its highest level since the euro was introduced, and young people everywhere, as the first to suffer the consequences of the crisis, are paying a disproportionally high price. Youth unemployment in Spain, for example, is above 50%.
We cannot afford to sacrifice a generation, or, rather, risk creating a lost generation that could destroy Europe's social fabric and stability. We need an immediate contingency plan: investment to finance job training, improve educational opportunities, and, crucially, create incentives for employers to hire young people is money well spent.
The ECB has been offering long-term loans to banks at a favorable rate. This money should be loaned out to small and medium-size enterprises, which are the lifeblood of Europe's economy. The EU also needs common initiatives to replace piece-meal bilateral agreements on tax evasion and tax havens, which undermine the goal of a fair society.
Third, member states should not cut the EU budget indiscriminately during negotiations on the Union's long-term spending plan for 2014-2020. If we are serious about a master plan for growth, we need to provide the necessary means. The EU budget is an investment vehicle that boosts economic growth and creates jobs. It finances crucial pan-EU transport and energy links. It helps to foster innovation, research and development. The EU budget leverages investment, allows for economies of scale, and cannot run a deficit.
The EU's lack of solidarity, imagination, courage, unity, and vision in recent years has made Europe a symbol of division for some, if not many. We cannot let this continue. Hollande's election offers us a valuable opportunity to meet the challenges that the EU faces. Alternatively, we can allow growing poverty, fear, and anger to give rise to xenophobia and racism, and thus place at risk the EU's greatest accomplishments.
But let us be optimistic. It is not too late. Europe can still emerge stronger from its current economic woes. The EU is changing direction at last, and Europe's leaders will find an energetic partner in the European Parliament.
Follow Martin Schulz on Twitter: www.twitter.com/martinschulz
Anne Sinclair: Good Luck, Mr. President!
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That is not to say, the coalition shouldn't be creating employment through civil maintainance, construction etc using LOCAL businesses and labour. Oh and whilst i'm at it can we raise the tax threshold to £12500 and kick start public spending?
And some sectors in the long run, deplete societies' wealth directly and indirectly with misplaced and displaced priorities and resources - financial, materiel, and human.
In many situations there is initially a growth curve; but the same trajectory can later lead to a decline after achieving peak efficiency. Unfortunately many feel if a little is good; a lot is much better. And then they creat their own spin to retain their perch and feather their nests.
Any comprehensive dialog in this situtation is difficult because some dialog about extreemes. As an example, surgery can be very good; but too much surgery is always detrimental and can even kill the patient.
So clearly too much of a good thing is bad. In many situations (like govt bureaucracy and military) we have reached the point of negative returns and are facing the widrespread ill-effects of the unintended consequences of good intentions and good beginings.
"Starve the beast" is the only way for those internally who are familiar with the situation / economic sector to develop a more efficient system for achievements. Yet such will not happen if the govt keeps "feeding the beast" with the "squeakiest wheel getting the most grease".
I hope America can also emulate that example; including end selling (subsidized) arms and combat jets to other countries; especially in the third world. Obviously here no one wins except arm dealers, manufacturer and the middle-men; and perhaps the politicians they bribe (aka campaign contributions).
Europe and America have to stop being the policeman of the world and care for their own region; while expanding world trade. That is a lesson that we can learn from Russia and especially China
By all means, please keep up the insane taxing and spending, the good old USA can use the capital flight from Europe.
"The problem with socialism is that eventually you run out of other people's money"
It was clearly written in his article as his goals.
I fail to see how my comment was off topic.
The troika refuse to accept reality even though the evidence is omnipresent and visisble to the world, that their ideologically driven polices are catastrophic.
The troika have claimed that their policies will produce growth, prosperity and satisfy the markets each of the last 18 times they have met and produced a new plan. Not once has any prediction come true, not even one time. Greece is now in it's 5th year of an imposed depression with over 50% youth unemployment and nowhere to go but down from here.
You say people are the top priority while the evidence clearly tells that they are not a priority. Not once has the troika considered people in their policies. They have already sacrificed a generation in Spain, Ireland, Greece, Portugal and more to come. Look at the youth unemployment rates and all the nations with close to 25% unemployment.
Fiscal discipline means reduced public sector spending. This in a time when the private sector is unable (debt) / fallling real wages, massive unemployment, destroyed confidence and unwilling to increase spending is ludicrous..
No economy can grow without increased spending, it will never, ever happen,so to construct an argument that says cutting spending will spur growht is a faffacy based on evidence free claims.
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Then came the euro and the inflation-angst of the ECB. They couldn't just lay off half the public servants in the name of the euro, nor simply double income taxes. There would have been revolution. But they also were no longer allowed to print money, nor to devaluate to keep their companies competitive. So there was an automatic and predictable shortfall in government revenue. Heck, I'm not an economist and even I saw this coming way back when (I opposed the euro for this reason, as well as because of the inflation obsession of the ECB.)
The result is what we see: governments unable to finance themselves, while the national products are priced out of the market (to the benefit of the Germans and other hard-currency countries, who take over the markets).
The Greeks papered over the problems too long with borrowed money, but the problem is more structural and predates their profligacy.
You say they could not just lay off half the public servants because there would have been revolution - if they had done it all at once, for sure. But other countries have enacted reformsl and they could have as well.
The idea that devaluation would have kept their companies competitive is likewise unrealistic - it would have made their companies less competitive, as new machinery would have become prohibitively expensive.
Devaluation keeps an exporting company competitive, but only as long as they don't need to import critical parts of their value generation chain. They showed a greek company producing thread on TV a few days ago. They managed to keep up so far because they had bought new machinery pre-crisis and dumped standard wool thread production for highly specialized products. Even they are struggling now because they don't get any loans for investments, but they could never have made the previous purchases with a devalued Drachma.
A third is LESS than a half; that is the new reality of the situation.
I don't think we can grow ourselves out the present situation; the era of DIMISHED EXPECTATIONS is upon us and we must adapt.
the word "socialist"?
"Rarely has a leadership change…"
Never, has the brain of the creature been so detached from the needs of its corporeal form.
"Europeans are recognising how interdependent they are."
In the same way its difficult to swim to safety. When one’s legs are forcibly tied (no referendum) to those of the suicidal citizen next to one.
"One country's failures can threaten the entire European economy"
Let's ignore nature’s strength-though-diversity maxim.
"Peace, solidarity, and prosperity"
And all for the cost of freedom, democracy, and progress.
"the financial markets"
should be investigated forthwith.
"Europe needs"
to be a market. Not a contest to decide which master race runs it.
"The growth pact can be properly financed by"
integrating the 1% and 99%, back into the 100%.
"What is to be done?"
The fact that you ask, reveals a lack of thinking. Let those that led us into this mire, attempt to lead us out?
"significantly more resources to boost its loan programs."
Translation : Essentially more of the same?
"We cannot afford to sacrifice a generation"
You just have.
"member states should not cut the EU budget"
Keep sending Drain Geld?
"The EU budget is"
unaccounted for. How did Greece get into the Euro? Its accounts were fiction?
"We cannot let this continue."
If the people had not called stop, who would have?
"The EU is changing direction at last"
But its side has been ripped open on the rocks.
Although the European Parliament's powers are too limited, they have been significantly increased. I am delighted to learn that its President is on Hollande's side. One more ally in the fight against failed austerity policies.