Attali: A federal Europe is the only crisis exit strategy

Jacques_Attali.jpg

The only way to save the euro and get Europe out the crisis while maintaining people’s living standards is to change EU treaties to have a more integrated union, Jacques Attali said in an exclusive interview with EURACTIV.

Jacques Attali is a French economist who has been chief advisor and sherpa to late French President François Mitterrand, when François Hollande was an advisor on the same team. Attali was the founder and first president of the European Bank for Reconstruction and Development. In 2007, he was entrusted by French President Nicolas Sarkozy to lead the commission on economic growth, which included Mario Monti, now Italy's premier. Attali now leads PlaNet Finance, an NGO assisting microfinance institutions across the world.

He spoke to EURACTIV Managing Editor Daniela Vincenti and Publisher Christophe Leclercq.

To read a shorter version of this interview, please click here.

You launched a petition campaign for a Eurofederation, calling for closer integration within the EU, proposing a common fiscal and budgetary system at the EU level. Do you really think people want more Europe, despite the euro crisis?

Please let me insist that our initiative is not only a call for a common fiscal and budgetary system, we propose a real federal Europe that will protect people against social and environmental dumping, that will have the democratic tools to boost the economic growth – that is, to create jobs – and that will speak with a single and therefore strong voice to our trading partners in the world.

Living standards will diminish if we do not increase the European integration. So the crisis makes us understand that we in fact urgently need more Europe. Furthermore, I am convinced that people are far less euro-sceptical than what some people say. We receive many encouraging messages for our petition.

Your petition is not positioned as a European Citizens’ Initiative. Why?

Our petition is done in the perspective of the ECI. There are actually different ways to have our manifesto inserted in the European political agenda. It could be addressed to the Commission through a Citizens’ Initiative, it could also be addressed to Strasbourg with a petition to the Parliament.

In theory, the Commission is allowed to propose changes in the Treaties, but it remains unclear whether such a possibility would be accepted in the scope of the ECI.

At this stage, we prefer to start by creating a massive movement in favour of a federal Europe, and then we will implement the most appropriate actions to bring it on the table of the decision-makers.

Is there an EU legal basis for a common fiscal and budgetary system? Which?

There is anyway a need to change the Treaties. Today every decision is taken with an intergovernmental process … This makes it very difficult, if not impossible, to move forward in the European construction without infinite negotiations. Remember that last summer at the peak of the Greek crisis, every European summit was considered as the “last-chance summit”, until the next one.

We cannot expect any long-term vision and any consistent plan of reform emerge from such a dramatised way of governing. The European executive body should have the democratic legitimacy to implement reforms with effectiveness and flexibility. And the Parliament needs the appropriate control power of course.

This institutional reform towards a federal Europe is necessary to implement a common fiscal and budgetary system. To be acceptable for the taxpayers, a common fiscal system has indeed to serve a European growth project and a fair redistributive policy defined in a political programme that people can vote for. As far as budget control is concerned, the current legal basis is pinned on ex-post controls, and sanctions.

This is counter-productive because this is pro-cyclical: a country in difficulty has to pay sanctions. It is necessary to implement ex-ante controls on national budgets. But what entity would have the legitimacy to give an opinion on a national reform programme and the associated budget? Federalism is the only solution.

Many VIP signatories to your petition are French or close to France. Your call will surely face some opposition in some countries that are against further integration. How do you plan to convince them?

We already have a warm support from people in Italy, Germany, Belgium, Spain, Poland, among others. What if we started with a kernel of countries in favour of federalism? That being said, every country should understand its interest to participate in a more integrated union.

This is the only solution to overcome the crisis successfully. This is the only solution to save the euro and to maintain people’s living standards. The Central Bank won’t be able to inject €1,000 billion into the economy as it did from December to February: there is a need for structural reforms to boost the economy, and to do it in a fair and sustainable way. We have all the potentialities to achieve such reforms: Europe would be the first economic power in the world if it were unified; it could be the winner of globalisation, at the crossroads of trade routes and knowledge networks.

The European Citizens’ Initiative has the potential to change Europe bottom-up. Do you really think EU citizens will seize the opportunity?

We already count more than a thousand signatories for our petition. This is a good start, so I think there is a willingness to change things. I am convinced that any major evolution of the European Treaties will come from the people.

Your petition was launched a few weeks before the French presidential elections. Can we expect some new pro-European initiatives under Angela Merkel and François Hollande (if he wins the elections)?

Whoever is elected in France in 2012 and in Germany in 2013, European institutions will have to evolve, there is simply no other sustainable choice. As we say it in our manifesto, we will have the choice between abandoning our sovereignty to unregulated markets, or strengthening it by building democratic, budgetary and social institutions.

Is there a latent angst of a too "German Europa"? Is there a French concern that more European integration could shake the basis of the republican tradition of France?

The next step of the European construction will definitely not be the extension of one model and one set of traditions from a specific country, be it one of the two largest economies of the continent. Germany has got its strengths, such as its strong industry, and weaknesses, such as its demography. France has got its traditions such as the key role of public services in the society. Neither country is a model or a straw man. That is why we propose that every nation be represented in a Senate of the nations that would form the Parliament together with the deputies who represent the population in its diversity. That construction is probably the best solution to ensure respect of each nation inside a federal government. It will then be the role of the executive power, elected on a programme presented to the citizens, to implement a particular policy.

Now if you ask me whether this policy should give as much clout to austerity as it is the case today, with the support of the German government, I clearly say no. Public expenditure needs to be rationalised, but there are good deficits, those that finance investments that will create value in the future, and there are bad programme cuts, those that jeopardise healthcare and education systems. That is why countries should rationalise their expenditure, and Europe should implement project bonds to finance new productive projects.

Recently German Foreign Minister Guido Westerwelle launched a new and informal debate with European counterparts about the future of the EU and how to find a new EU narrative for the people. They are going to meet once a month, and at the end of process they want to present their reform ideas to the Council. The French minister was invited but did not join the Berlin group. So, what is your opinion about Westerwelle's initiative chances of success do you expect?

Nothing was revealed about what was exactly said during the first meeting, and what are its concrete expectations. I understand that France and Denmark, which both denied the invitation, had political reasons to do so: France because of the presidential election, and Denmark because it is currently presiding over the Council. Independently of the success of this initiative, it shows that we are at a moment when the institutional question is in everybody’s mind and on everybody’s mouth. This is the moment to move forward.

Should the smaller EU member states play a more important role or should they leave the initiative to the German-French axis?

We see with the arrival of Mario Monti at the head of the Italian government that the German-French axis is not something written in stone. But we are still talking about an intergovernmental approach when we mention the German-French axis; it has to evolve and smaller EU member states have an important role to play in this process.

Jacques Delors slammed EU leaders last week saying they are completely destroying the heritage of the fathers of Europe and pointing the finger to European Commission president for its lack of initiative, and for playing the “pyromaniac fireman” on the eurozone crisis. Are we lacking a real vision for the European project in the 21st century?

There is clearly a lack of vision and the crisis has revealed it: we see every day that the eurozone is managed with short-term interventions only. Once again, the latest example being the injection of 1,000 billion by the ECB between December and February: it may temporarily solve a liquidity problem, but it does not structurally change anything on the debt crisis.

To do so, we must focus on growth, and implement project bonds to invest in strategic sectors such as energy, telecommunications, and innovative industries. But how to select the projects, convince the investors and take the lead without a real vision for Europe? How to undertake the necessary adjustments between the most dynamic countries of the continent and the ones in difficulty without a clear vision of tomorrow’s equilibrium? How to play a major role as a continent on the global stage without a solid strategy for this continent?

What’s your own vision for the next 10 years? Do you think Europe will be able to rebuild cohesion from the ashes of the euro crisis?

I really think we are at a moment when a federal “jump” is feasible, and that the crisis will oblige the decision-makers to think differently. But will it be too late when this change in paradigm occurs?

Today we oscillate between euphoric moments when people say the crisis is behind us, and large doubts when the markets – as they have been doing this week – get tighter. So we still haven’t learnt from the last three years. In that situation, the euro could very well disappear in the forthcoming months, and the consequences on Europe would be dismal.

On the contrary, if after the presidential elections in France, a new strategy is fostered, based on a growth-focused agenda, the population could gain confidence and start a bottom-up process to write the next step in the European construction. We have so far the largest population taken as a whole; that population has in general a high-level education, is mostly in good health, can take advantage of efficient infrastructures, and inherited a rich history and strong values. Europe can still be the centre of creativity, knowledge and innovation.

Subscribe to our newsletters

Subscribe

Want to know what's going on in the EU Capitals daily? Subscribe now to our new 9am newsletter.