By Iskanderov Pyotr and Margarita Bogatova
Two opposite views on how to lead Europe out of crisis are likely to clash during an informal meeting of the EU leaders in Brussels on Wednesday. Unlike his predecessor Nicolas Sarkozy, who supported German Chancellor Angela Merkel over austerity measures, the new French President Francois Hollande promotes eurobonds and investing in industries as the only remedy to cope with the ongoing financial crisis.
The issue of eurobonds seeks to attract extra money into the EU and invest it in the region’s infrastructure. It is not a secret for anyone in Europe that the money raised through eurobonds may be spent not only on infrastructure but – which is more likely – to help weak economies such the one of Greece, with Germany expected to share most of the burden. Frau Merkel does not seem to be ready to save Greece, Portugal or Spain at the expense of the German nation. Her opponents believe that only huge investments into Europe`s industry and infrastructure will lead the region out of crisis. This is what helped Hollande win the recent presidential election in France.
Both approaches have their drawbacks. If they choose loans, who will give them? Meanwhile, austerity measures should not be forced from abroad but suggested by a country`s government, says Igor Nikolayev of the Russian auditing FBK company.
“The situation in Greece has proved that austerity is a very challenging task. Let`s imagine that Greece quits the eurozone, lives through a default, prints drachmas, making its people cut down their expenses even more. If this happens, they won`t be able to blame the EU for cuts but will have to economize on their own. In this case, austerity is really what makes sense now. But this scenario has not been suggested yet. They offer only two ways- either austerity or loans. The question is who will give these loans?”
The outcome of the eurobonds debate depends on the position of Great Britain which is part of the EU but not a member of the eurozone, the head of the Centre for German Studies at the Russian Academy of Sciences Vladislav Belov says.
Eurozone is just part of the European Union. It puts into action the idea of an economic and currency union supposed to comprise all 27 EU member states. As of today, it comprises only 10. Great Britain is a key European economy which remains outside the eurozone. Addressing the EU summit in December of 2011 the UK`s Prime Minister David Cameron toughly criticized a joint France-Germany initiative to create a budget treaty within the EU. Evidently, a position London is expected to unveil in Brussels on Wednesday and during the EU summit on June 28-29 will determine next steps towards Europe`s economic recovery.
The first meeting between Merkel and Hollande in Berlin on May 15 did not bring any breakthrough on the issue. Merkel, however, gave it to understand that a compromise is possible. The Prime Ministers of Italy and Spain, as well as the European Commission President Jose Manuel Barroso have vowed their support to Hollande during the meeting in Brussels. Constructive relations Hollande has already established with the EU leaders could force him adopt a milder approach to the issue.