December 17, 2012
Undoubtedly, globalisation has cost countries heavy losses in terms of product delocalization, reduced tax income, unemployment and social unrest. Multinational corporates have increased their profits and have become more powerful while the medium-small Industry has suffered somewhat, especially the Secondary one and Agriculture; households are now inured to stove-ripened fruit and compressed salaries but leisure flights have become cheaper.
And governments? They are the true losers on two respects: most skilled workers have lost their jobs and with time their expertise, causing heavy social cost on the national budget; politicians have lost grip on their electorate.
However, an unintentional epiphany has manifested itself in the European political stage. In the entrenched financial system, where debts are converted into tradable securities and packaged as “financial products”, these are continuously exchanged while governments find it easy to buy back and issue new debt with protracted redemption dates at reasonable interest rates, establishing an artificial sense of liquidity that does not necessarily coincide with solvability. All goes well until security buyers (markets) are confident that, should need be, they can sell “the virtual product” in a matter of minutes. If confidence in the issuing State falls then solvability becomes of utmost importance and the concerned government is compelled to wear an economic straitjacket if does not want to go bankrupt. Concurrently, rating agencies monitor governments’ current accounts and future budgets, emanating the famous and dreaded “rating”. A number of specialized financial agents synthetize all the mentioned facts into an unique number, the spread, pointing out the added interest to be paid on top of the most solvable State.
This state of affair has intimidated governments – at least in West-European countries – in pursuing a more prudent budgeting in terms of moneys and promises to their electorate.
The European-Union’s political society is a second element contributing to the “wellbeing” of democracy in each associated state member. Cases in point are those of Romania, where Mr Ponta, prime minister, was tamed by the European Council in connection with his dispute with president Băsescu (concerning representation at the Council).
In Hungary early this year, Mr Barroso warned Viktor Orbàn, Prime Minister, that he was breaching the European values of democracy by threatening the independence of the Judiciary while raising serious concerns about the revised Central Bank and Media laws.
In Italy, with the recent fall of the Monti government enacted by Mr Berlusconi. Retracting a previous declaration, Berlusconi decided to run again for elections challenging the former technocrat government’s leader. Seizing the occasion of the ECOFIN meeting of last week, Mr Joseph Daul, leader of the European People’s Party, with ingenious diplomacy invited both Monti and Berlusconi declaring that Monti was the preferred name to lead a new government; do notice that the Italian PDL party (Berlusconi) is currently a member of the EPP.
Universal Finance and Euro-Group Institutions are the two elements forcing our Governments to behave judiciously and more responsive toward their constituencies; in itself this is a real achievement. Some local politicians will argue that the European Union often interferes in national politics or they claim that we cannot be ruled to the tune of “spreads and ratings”; those politicians miss to consider that we are bound toward a Federal Europe where some decisions are collectively taken!Elio Pennisi