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Crisis: EU at crossroads, coming year to be turning point

02. January 2012. | 09:14

Source: ANSAmed

For a Europe pinned down under a debt crisis and with pressure from the US and China, 2012 will be a year seeing EU change its look: the slow integration which has been its hallmark up until now is no longer viable, with markets dictating the pace and its traditional time spans ''glacial''.

For a Europe pinned down under a debt crisis and with pressure from the US and China, 2012 will be a year seeing EU change its look: the slow integration which has been its hallmark up until now is no longer viable, with markets dictating the pace and its traditional time spans ''glacial''.

It has already seen a bit chip off, in the form of Great Britain rejecting the new Save-Europe Budget Pact as well as in the form of IMF funds to help the eurozone.

And so the EU is now hanging in the balance between a 27- and a 17+: in the new form to ensure its survival it could let London go and fight to keep the others, or work on making the eurozone ever more compact, possibly extending it to some country daring enough to accept its new rigour.

Europe's trial will get underway from the very beginning of the year: the chancelleries and the delegates of the European Parliament are already working on the text of the new Budget Pact, which on January 24 will have to receive approval from economic ministers and on January 30 that of leaders in an extraordinary session.

The Budget Pact is considered a save Europe measure, and will be implemented without Great Britain, which is taking part in drawing it up as an observer: after having dropped out of the operation it was invited by EU president Herman Van Rompuy to the work sessions in the hope that it might change its mind.

However, the hope is a feeble one: London's second 'no' - to the FMI funds set aside to save the eurozone - has for the time being driven a sharp wedge between the UK and continental Europe. Meanwhile Europe is moving forward, even if with only nine if necessary: the leaders, who remember well the lengthy ratification of the Lisbon Treaty, have decided that the intergovernmental accord to create a budget union will come into force as soon as it is signed by nine states.

Strengthened cooperation is urged by France and Germany, which have distanced themselves from the communitarian spirit of which Italian PM Mario Monti often speaks, and to which also the representatives of the European Commission and Council, Van Rompuy and Jose' Barroso, are against.

However, the French-German directorate refuses to reconsider the matter, especially after accusations of not being able to solve the crisis so far and of having taken action later than it should have.

Moreover, economic outlooks show a Europe (or at least most of it) in recession for 2012, the situation as concerns the markets continues to be critical, Sarkozy will be standing for election in the spring and Merkel has to deal with a coalition pushing her towards the maximum level of rigour possible and the lowest level of solidarity.

The result: Paris and Berlin cannot afford anything but the recipe of rigour and discipline that they intend to administer - by force if necessary - to the eurozone and possibly to all of Europe in order to get it out of the crisis.

Whether or not rigour will actually solve the situation remains to be seen. For example, the ''Save Italy'' measure, on the basis of taxes and cuts to bring down the enormous level of debt on the basis of the Sarkozy-Merkel recipe, Italy would have to be able to take up a virtuous cycle leading to market confidence in a country with a debt over 60%. Instead, markets are still anxious and the spread (the differential between the German bund and its Italian equivalent) is still over 500.

With the downgrade of some eurozone countries expected in January, and the GDP drop that awaits Europe at the 2012 threshold, the next few months will be decisive to slap down cement on the foundations, giving an unequivocal sign of Europe's solidity. ''If the euro explodes, Europe will no longer exist,'' Sarkozy said a few weeks ago. The responsibility is therefore in the hands of the EU-27.

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