PARIS - In Europe, investors are running the show. They have the ability to steer a country’s conduct of economic affairs and to make or unmake governments. What used to be the purview of the sovereign people of a nation have now passed into the hands of a few who trade on global markets.
The most recent example is the successful financial coup in Italy. In spite of countless attempts, neither prosecutors nor Italian public opinion had managed to get Silvio Berlusconi to leave office. All the financial markets needed was a few days of heavy pressure on the rates of the Italian debt. Now trusted former European Union Commissioner Mario Monti has stepped into Berlusconi's spot, in large part in the hopes that it will calm investor worries.
The scalp of the Italian executive was added to those of the heads of the Greek, Irish and Portuguese governments. And a new austerity plan is soon going to expand a growing list. Like it or not, politics in Europe are now taking place in the trash heap of the economic crisis.
How did it get so bad? Without coercion or conspiracy, governments gradually abandoned the reins of power to Europe’s creditors. The turning point happened in March 2005, when instead of going on a diet, France and Germany put pressure on the EU Council to relax the rules of the European Stability and Growth Pact, which they deemed too inflexible and ultimately unenforceable.
A door was thus opened to allow public finances across the euro zone to start sliding. Since then, deficits and debts have continued to grow, greatly increased by the crisis of 2008-2009. As a result, the House of Europe has changed hands. And its new owner is worried about paying the rent. Such anxiety can be seen as blown out of proportion.
However, some European members are so desperate that they have no choice but to give guarantees to their creditors. For Europe, decision time has come. It can no longer walk the path it has followed so far, simply transferring pressure from its investors onto its most indebted member states, just in order to keep up appearances.
The situation in Italy struck a blow in the heart of Europe. And as things stand, the vortex could soon sweep away Belgium, or even France, judging by the evolution of their interest rates. Regaining control means moving towards federalism as soon as possible. This too will obviously involve a significant loss in terms of sovereignty. But the sacrifice is actually not that great, because that same sovereignty has now become virtual -- and subject to the will of investors.
Read the original article in French
Photo – friends of Europe