ANALYSIS:The treaty may need to include a protocol that aims at boosting the EU's economic activity
IF IT is impossible to evade chatter from European leaders about the requirement for new measures to promote economic growth, translating talk into action is another matter.
The rise of a growth agenda can be traced to three distinct forces, the first being the rise in concern about the failure of Europe’s austerity blitz to improve market sentiment.
The second was the arrival in office of Italian technocrat premier Mario Monti, an ardent believer in the necessity for growth to overcome high indebtedness.
The third is the ascent in the French presidential election of socialist contender François Hollande, who wants to refocus the stability treaty towards growth policies.
We won’t know until tomorrow week whether Hollande succeeds in ousting Nicolas Sarkozy. If he does, however, a new protocol may be added to the treaty in a bid to intensify efforts to expand the EU economy.
The Government insists such a development would not present a problem. “This would not have constitutional consequences,” Minister for Justice Alan Shatter said this week.
In the referendum campaign, however, questions inevitably arise about the merits of voting on an agreement which may already be on its way to the alteration suite. Still, it is as well to note that any change would be very unlikely to dilute the ban on European Stability Mechanism aid for countries which do not ratify the agreement.
For all the earnest talk about growth, the fact remains that it is not really possible to legislate in an international treaty for it. If it was, there would be full employment everywhere and 15 weeks of sunshine holidays for everyone. If only.
What political leaders can do, however, is improve the conditions for job creation and investment. Right now in the euro zone, this is the subject of fevered debate. For example, all member states are under pressure from the European Commission and the European Central Bank to execute structural reforms.
The basic aim is to oil the cogs of the economy. But this can be politically tricky, with vested interests to confront. Taxi drivers don’t like it when the licensing regime is relaxed; ditto lawyers when their profession is opened up.
There is more, however. The irony, indeed, is EU leaders have examined dozens of plans to boost growth.
Already on the table are initiatives to deepen the reach of Europe’s single market, expand the powers of the European Investment Bank and introduce EU-backed project bonds for infrastructure projects. Each of these is locked in the political process.
The same goes for the commission’s “2020 strategy” to boost innovation, green energy, youth employment and myriad other high-minded things. In Brussels, the argument goes that progress is but a matter of leadership and will – all the more so given the escalation of the debt crisis.
Now more than ever, however, political and financial constraints are everywhere.
While it is also open to leaders to stimulate the economy by releasing money into it, the biggest problem of all is the lack of cash.
