We set down with Enrico Letta, the former Italian Prime Minister, in his office at SciencesPo University, Paris, following the launch of his new book ‘Through thick and thin’ (published in Italian only) to discuss eurozone reform and how the EU can do better.
TPE Is reform of the euro desirable?
Enrico Letta Reforming the euro is crucial, because the euro was built for summer, not for winter.
Winter shows us the euro’s weaknesses. Some of these began to be addressed in 2012-13, with the Banking Union and the European Stability Mechanism, but after the worst moments of the crisis there was a lack of political will to finish the job. So these changes were never completed, which is why I believe we must finish off the blueprint for the euro.
Today’s imbalance is less pronounced than ten years ago, when Ireland first sought financial help from the International Monetary Fund (IMF) [the first banking crisis in a Eurozone country].
What was created in 2012-13 – a partial Banking Union, and the European Stability Mechanism – under Mario Draghi [President of the European Central Bank] was very important, but not enough.
Today we see the difficult consequences born out of a lack of a real European Monetary Fund, which would mean complete the European Stability Mechanism, and a Banking Union with – crucially – a European wide deposit guarantee.
There needs to be an investment branch accompanying EU monetary policy. The Juncker Plan is this investment arm in its embryonic form, it must be fleshed out.
In my book I outline a project that I would call ‘Big Europe,’ which would have the European Investment Bank (EIB) at the heart, the motor, which would become just as powerful as the European Central Bank (ECB).
So Europe would be both the ECB and the EBI. Their aim would be to increase investment and budgetary discipline, as well as monetary and interest rate stability.
Without that, we will be powerless to remedy the next crisis.
I hope that after the election of Macron, and the German elections [in September], the Franco-German axis will reorient Europe in this direction. Mario Draghi is already pushing for such measures.
TPE You pay homage to 3 men that were active in the 80s and 90s, Helmut Kohl [former German chancellor], François Mitterand [former French president], and Jacques Delors [former president of the European Commission]. Shouldn’t we judge them by the consequences of their policies? The rejection of Europe, the rise of populism, the euro crisis, increasing sovereign debt…
Enrico Letta Mr Kohl, Mr Mitterand and Mr Delors finished their work in the mid-1990s.
The problem is that we haven’t continued with their same vision and execution –that is what has left the euro incomplete.
The process of the creation of the euro as a currency – which began in the 70s – was dealt a mortal blow in 2003 by France, Germany and Italy, when France and Germany crippled the Eurozone’s Stability and Growth Pact [by continually flouting the spending rules], with Italy in the EU presidency willing to turn a blind eye.
For me, that’s what opened the door for the Greeks to fiddle with their accounts.
They could say ‘if France, Germany and Italy don’t adhere to the Stability Pact, why should we?’ So 2004 not only signalled the beginning of Europe’s financial woes, but also the beginning of the non-completion of the Economic and Monetary Union, as the Stability Pact was not respected.
Certain countries didn’t take their responsibilities seriously, and consequently EU coordinated financial solidarity and investment never materialised.
Europe is stuck in this position and nothing has moved forward. I believe it’s not the fault of the leaders, but the fault of the governments’ lack of courage in the 2000s. They believed that the euro was so large a mouthful to swallow that everything else had to be put on hold.
The 2000s mentality was ‘we’ve done the euro, now we need to digest.’ But they didn’t understand that they had to continue, not stop, because the world was changing. The EU was left without effective financial tools.
“There is a fatal divide between what the elites and the people think.”
TPE Is there not a gap between certain elites – who refuse the idea of borders on a moral basis – and certain sections of society – who call for tighter borders? Should the elites impose themselves on the people in a democracy? Or not?
Enrico Letta A study published by Chatham House recently showed a clear divide between the ‘elites’ and the ‘people.’
In all the big European countries, it is exactly as you say. There is a fatal divide between what the elites and the people think.
There is a real job to be done. Not only does it relate to media and the stories they tell, but it is also cultural, political and educational.
Big changes are required in each of these domains to bridge the gap. The elites can’t brutally impose their will on the people, the internet makes all that impossible.
I wrote my book in reaction to Brexit and Trump’s election, which are symptomatic of this gap. The rise of Macron is a positive sign that the world is moving in the right direction, but it is by no means definitive.
“The EU must work out how to make a difference to people who aren’t part of the elite.”
We need a European leadership that is capable of speaking to the people. This is absolutely essential.
Until now the European leadership has been able to speak to – and win over – the elites, on the left and the right, but the people have rejected them. This needs to change.
One example I give in the book is the Erasmus scheme, which is a double-edged sword. It’s Europe’s great success, but if we talk about it as if it were the only big success story, we arm those who say that the EU is purely for the elites. After all, Erasmus is only for university students, who will likely end up forming part of the elites.
The EU must work out how to make a difference to people who aren’t part of the elite.
TPE Christian Democratic thinking is widely prevalent in Italy. Do European morals not contravene the notion of restricting immigration? And what do Christian Democratic values say about defending ones own interests: borders, defence of culture, the preservation of heritage…?
Enrico Letta The EU must demonstrate that it is not currently capable of managing this enormous migration phenomenon, but that no country would be able to manage the crisis efficiently on its own.
That’s the message the EU must send.
Naturally, it is a difficult message to convey when there is an influx of one million people. There are the ‘normal’ migration routes, but the war in Syria – which was linked to a particular concoction of factors – meant one million people coming to Europe. It was disastrous
But ‘normality’ will continue. Europe is shrinking, and ageing. The population of Africa will double in 30 years, and it is getting younger, so there is clearly a way forward.
Christian – and secular – values must be applied to the refugees, but they must be separated from economic migrants, who need to be subject to certain selection criteria.
We must also maintain relationships with the sender countries, or things will get worse.
The EU must demonstrate that it is not currently capable of managing this enormous migration phenomenon, but that no country would be able to manage the crisis efficiently on its own.
TPE Is it Europe’s responsibility to take refugees in from the Middle East? Shouldn’t other international actors who had a hand in the crisis not also lend a hand? The U.S, Russia, Iran, the Gulf States etc.
Enrico Letta Of course, the answer is yes.
The French version of my book perhaps sheds some light on what I think about this issue: “Building Europe in a world of brutes.”
“I’m in Pisa, you’re in Paris, and we’re both voting for a Spaniard.”
Not everyone shares the European attitude towards democracy. The ‘strongmen’, enforcer-type leaders are who I am referring to as ‘brutes.’ Should we become more like them, say ‘this is the mood of our time,’ and be like Erdogan? A bit of Trump here, a bit of Putin there?
No, absolutely not. We must fight to do exactly the opposite.
TPE Is Europe currently acting as a pawnbroker, where every nation state hands in a few precious items – a portion of national sovereignty – in return for money, and a bit of protection? Don’t we need the EU to actively help the nation states – with, for example, a border force, or military protection – rather than just giving them money?
Enrico Letta I like the analogy very much, and I would add that what’s missing is a European political space.
“A bit of Trump here, a bit of Putin there? No, absolutely not.”
Now is the time to create this space. The evolution of what European nations are collaborating on means that there is a collective desire to determine how to work together.
We can’t just ask our Prime Ministers or our delegates in the European Parliament (EP) to work it out. They are election by national constituencies; they operate on a national level.
I strongly believe that we must make the most of the 73 British MEPs who are due to leave the EP. Rather than redistributing them between the member states, which would turn into a bloodbath and do nothing positive for the image of the EU, these seats should be given to pan-European deputies.
This would mean the creation of a 28th electoral college, where we would mix the candidates and the electorates. I’m in Pisa, you’re in Paris, and we’re both voting for a Spaniard because of our political beliefs.
This would be a major change because it would finally bring about a Europe-wide political debate.