In a lecture entitled "Why Europe? Why the Crisis?", delivered at ESADE Madrid, Josep Borrell, former President of the European Parliament, declared unequivocally: "Europe is no longer a bet, or an opportunity; it’s discipline". Mr. Borrell acknowledged that, of the various reasons that initially prompted the continent to join together – "the consequences of the Second World War, the raison d’être of Germany and France, the Soviet threat, the fall of the Berlin Wall and survival in the face of globalisation" – only one rational argument remained: "The 21st century will be a century of emerging giants and decadent giants. In order to compete in such a context, we must remain united".
However, Mr. Borrell expressed doubt as to whether the union would be as beneficial as it was in the beginning: "It is not clear that we are the path to prosperity, because we are old, we are heavily indebted, we are very small – about 6% of the world’s population, compared with the 25% that we were after the Second World War – and we are energy-dependent". Additionally, he declared, "We are seeing a process of general disintegration because we don’t have a common culture", and, in fact, "The crisis has led us to ‘every man for himself’ both inside and outside of countries; hence we have not just the question of Catalonia but also what’s happening in Italy, in Britain and so on".
Despite these remarks, Mr. Borrell made his stance clear: “It is a complete exaggeration to say that the euro is in crisis when it is at $1.30. Those who are in crisis are the countries that have lost competitiveness and lack economic tools such as currency devaluation.¿ He insisted, however, that leaving the euro is not the solution because such a process would be expensive and painful: “Even if you leave, your debt will remain in euros and will multiply. Also, if you don’t have trading partners to solve the trade deficit, who is going to help you?¿ He added, with a note of irony: “I guess you can always do what Italy did under the House of Medici: two currencies, one for the rich and one for the poor.¿
Ten root causes of the crisis in Europe
Mr. Borrell cited ten causes of the crisis in Europe:
1. "The lack of an economic sovereignty agreement": "We all cheated to join the Maastricht treaty, starting with France and Germany, who reached an agreement in order not to be punished".
2. "Not all problems are tax-related": "We have only controlled the public sector, because we thought that it could, in turn, control the private sector". "In Greece, the deficit caused the crisis; in Spain, it was the other way around".
3. "We took no structural adjustment measures": "We thought the euro was sufficient, but on the contrary, it has generated divergence".
4. "Cleaning up after the fall of the Berlin Wall": "Fifteen new countries appeared, and we admitted them without delay; we preferred enlargement over deepening. This made Europe bigger but not stronger".
5. "We need to tackle globalisation": "Even Germany is too small to go it alone".
6. "We have strong interdependence": "For eight years, Germany’s risk was considered on par with that of Greece. Not anymore; interest rates are not homogeneous, nor are cross-border movements".
7. "We lack a lender of last resort": "We’ve only allowed the European Central Bank to work in secondary markets, that is, by the back door. If we do otherwise, we are in violation of our treaties".
8. "We have policies that create a recessionary spiral": "If we had a federal budget, we could offset contraction with expansion".
9. "We restrict the credit supply": "We don’t hear about this, but it’s extremely dangerous; it’s suffocating the economy"..
10. "There is a crisis of governance": "We wanted to punish the Greeks rather than help them. Governments have gotten into power struggles with the markets and lost.¿ “If we want to do politics, we have to do it at the European level. Even in 1996 we couldn’t do what we thought was appropriate because the markets were in charge".
The ESADE Alumni Public Management Club cordially invites you to this round table, where we will consider the future of Europe and the current euro crisis.
The dreams of a more politically and economically integrated Europe have been altered by the difficulties in common government and the ever-increasing lack of public confidence in European anti-crisis policies that are not making citizens' quality of life better. Is the European project truly irreversible? Are there alternatives to the current situation? How can we legitimise Europe to citizens?
Speakers: Francisco Longo, Secretary General and Professor of the ESADE Department of People Management and Organisation Josep Borrell, Former President of the European Parliament
Graduate in Aeronautical Engineering from the Universidad Politécnica de Madrid, Master in Operations Research from Stanford University (Palo Alto, California), Master in Energy Economics from the French Institute of Petroleum (Paris), Doctor in Economic Sciences from the Universidad Complutense de Madrid and Professor in Business Mathematics on sabbatical leave. He also worked for CEPSA for seven years. Since entering politics in 1979, he has held various positions, including General Secretary of Budget and Public Spending within Spain's Finance Ministry; Secretary of State of Finance, in charge of the fight against tax fraud; and Minister of Public Works, Transport and Environment. In 2002, he represented the Spanish parliament as a member of the European Convention in charge of drafting the European Constitution. He headed Spain's Socialist Party list in the 2004 European elections, which his party won, and on 20th July 2004 he was elected president of the European Parliament, a position he held until 2007. En 2012, he left his role as president of the European University Institute.