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The Emperor's new clothes - EU's national governments facing the financial crisis
by Newropeans-Magazine
2009-01-29 10:09:16
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The course of the global financial crisis is showing the real nature of EU's national governments and politicians.

Like the emperor in Hans Christian Andersen’s tale, they seem more worried to show their appearance than engaged in seriously facing the problems which stand in front of them.

After having failed to foresee what was going to happen, when not having denied it, and after having been unable to discuss a European stimulus plan[1], they began to say that they had reached an agreement, pompously called “European Economic Recovery Plan”[2], assumed to be equivalent to about 1,5% of the GdP of the European Union (about EUR 200 billion).

As all could clearly realize, the only agreement was that every Member State should have counted on itself, taking account on their individual.

Namely, they agreed on measures that every Member State had already adopted on its own (from the German and French bail-outs to the Irish nationalisation of banks), without any guarantee for investors, without any serious plan of investments.

As a result, almost immediately several of these measures were reckoned as wrong or ineffective: sums of “case-by-case solutions” or “bottomless pits”, very soon they also raised serious concerns about the real benefits for taxpayers[3].  Some States (like Italy), unable to allot big sums to back their banks, due to public debt or to a lack of resources, assumed that their banks were safe and in good health[4].

One doesn't need to be a palmist to forecast that even worse consequences will be given from these choices.

Despite the EU Commission's and Council's declarations, bad consequences of this approach in the field of the competition will be perceived very soon.

Besides, many banks in Europe manage cross-border when not full European activities, so that the idea of national governments to finance their domestic banks is just an illusion. Moreover, it further weakens every shy attempt to impose new rules of management (like capital ratios, managers' and employees' wages based on long term performances of the business and so on) and new business models to the banks, and it raises in the managers and leaders of the financial system the conviction that their wrong behaviours could be repeated because someone else will pay for their mistakes.

In Andersen’s story, as the emperor starts his walk, a little kid shouts “the king is naked!” and the crowd rumbles, knowing that he's right.

And in Europe even private bankers are now claiming for a single European regulator, reckoning that the system of national regulators is proved to be inadequate[5].

Any  reactions by national leaders? We will see.

But if we had to base our opinion on the experience we would not be optimistic.

In the tale, when the kid shouts his truth, the emperor holds his head high and continues the procession.

This has just happened many times.

When the Irish people rejected the Lisbon treaty they just remarked that the king was naked, refusing to realize that the EU lacks democracy and is ineffective. But, just when the gravity of the financial crisis was perceived, the national leaders didn't guess a better solution then assure that (if Irish people accepted to ratify the Treaty with another referendum) nothing in it should have made any change of any kind, for any Member State, to the extent or operation of the Union's competences in relation to taxation[6]. Like nothing was happening.

And, while the figures show a downturn of the economies, unemployment and GdP growth all over in Europe, they go on to minimize and to “foresee” good news for the next year.

The meaning of the Andersen's tale was that the emperor was unfit to lead his people.

That's just the point in Europe. The Europe of national leaders is over. Europeans need and deserve much more.

Danilo Del Gaizo*
Roma - Italia

* Danilo Del Gaizo is member of the Newropeans' European executive managers team and official candidate in Italy for the European elections in June 2009. 

[1] Breitbart.com

[2] Europa.eu

[3] Business Week

[4] News Kataweb.it

[5] Financial Times

[6] See the Presidency's conclusions of the Brussels European Council above quoted  
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Emanuel Paparella2009-01-29 12:27:24
This article dovetails today's article by Beatriz Martinez. Indeed the Emperor is naked in more ways than one as I have pointed out on various occasion. His nakedenes began to show when a fig leaf had to be invented by changin the name constitution to treaty, the so called treaty of Lisbon which in effect means that the EU does not have yet a visionary treaty which will effectively unite all the cultures of Europe; it has a banal treaty to promote capitalism and material prosperity while ignoring intellectual and spiritual destitution. That is sad indeed.

kwabena amoako2009-01-31 06:44:58
i thank you

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