Sunday, September 23, 2012

Ayrault Defends the TSCG

Mediapart once again leaps to the head of the pack in French journalism. The online "paper" has published a long interview with Jean-Marc Ayrault, the first in-depth defense of the TSCG by the Socialist government, which is now pushing for ratification by the parliament of an agreement negotiated by Sarkozy, which Hollande had promised to "renegotiate" but which is being presented to Parliament word-for-word as it was drafted by Merkel and Sarkozy. Ayrault, who is not unafflicted with la langue de bois, argues essentially that this agreement is but a step toward needed changes in European institutions. He presents the recent initiatives of the ECB as an example of such a change:

L’Europe est un combat, mais les peuples ont le sentiment que ce combat leur échappe. Il est illisible, mené d’en haut, technique… Or l’espoir suscité par la campagne électorale était aussi celui d’une repolitisation de ce débat européen. C’est une habileté tactique d’avoir promis une renégociation, qui est devenue une réorientation, et un pacte de croissance en complément, qui reprend des projets déjà engagés, sans objectifs précis d’emplois et de croissance ? Pourquoi avoir cédé au bout d’un seul sommet ?Ne faites pas l’impasse sur l’évolution du rôle de la BCE. Jusqu’à l’élection de François Hollande, c’était un sujet tabou. Là, elle s’installe progressivement dans un rôle qu’on souhaitait lui voir jouer. Ensuite, je vous ai dit qu’il fallait aller plus loin et porter d’autres investissements…
Now, this is more than a little disingenuous. It's true that the ECB's decision to support southern-tier sovereign debt is a positive step, which has averted imminent disaster. But it's also true that the conditionality of that support--contingent on austerity imposed on the recipient countries and enforced by threats of a cut-off of aid--sets an institutional precedent that social democrats may not wish to support. It's also true that the ECB's change of direction had little to do with Hollande's election and everything to do with the fact that the markets had lost confidence in the ability of the southern-tier countries to survive. Investors have now changed their views but only because the ECB is implicitly guaranteeing a floor price on the bonds they are acquiring.

Mediapart is correct to point out, in the very next question, that promises of future changes in European institutions are cheap talk of a kind that has long plagued European institution-building. If the process is to move forward democratically, the French government needs to lay some concrete proposals on the table and make room for public debate. Ayrault is essentially asking for a blank check: to reject the TSCG, he rightly says, would precipitate an immediate European crisis. True enough, but it's past the time when this sort of blackmail should be allowed to underwrite Socialist policy. What is needed is at least an outline of an institutional reform that makes sense in terms of allowing a unified currency zone to continue. Does Hollande have a plan? Are there discussions with the Germans? Have the Germans put forward a plan of their own? What are the ECB and IMF suggesting? Ayrault addresses none of these issues, but even this feeble effort is more than we have seen to date, and it does signal that the necessity of a reform process has been recognized at the highest level. How that process is managed will reveal a great deal about the Hollande administration. Decisions cannot be put off indefinitely, and the public deserves to hear about what is being considered in private.

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