This week, Debating Europe will be publishing interviews with some of the heads of the largest political parties and groups in the European Parliament. We’re especially interested to see how they differentiate themselves from rival parties when they respond to your comments. What alternative solutions do they each offer to the problems currently facing Europe? How is a “Social Democratic Europe” distinct from a “Liberal Europe” or a “Conservative Europe”?
We’ll begin with an interview with Poul Nyrup Rasmussen, former Prime Minister of Denmark and outgoing President of the Party of European Socialists, an umbrella political party made up of centre-left parties from across Europe.
On the face of it, Rasmussen’s party is facing its most serious crisis since the beginning of European integration. Since the recent elections in Spain toppled Prime Minister Zapatero, only 4 out of 27 heads of government in Europe belong to the centre-left. The Socialists also fared badly in the 2009 European elections, which saw the centre-right European People’s Party dominating. Not only that, but the very ideology of “Social Democracy” seems under threat in an age of austerity; earlier, Debating Europe looked at whether we can afford to keep the “European Social Model”, something seen as a crowning achievement of European Social Democracy.
So, how does Rasmussen differentiate his party from the rest? And what does he think about the debate we’ve been having on the “European Social Model”?
I feel that the Conservative majority of Europe have played a bad hand in the past 18 months. Take Greece… they were too hesitant and they were also non-European in the way they did it. What we need in the Eurozone is therefore true European mechanisms – as we have proposed – with a new economic and European financial facility which is truly European, so we avoid [a situation] where the markets can speculate whether this national parliament or that national parliament will really say “Yes, it’s okay to help Greece”.
Is there a problem with the Euro itself? We’ve had a fairly detailed discussion prompted by mike1966 about whether it might be time to abolish the Euro. On the other hand, we’ve had commenters arguing that the problem is caused by having a monetary union without an underlying fiscal union.
The problem is not that you have the Eurozone. The problem is not that you have a European central bank. The problem is that we don’t have an economic cooperation which is truly European and can keep the 27 countries together. That’s why we have proposed to develop a strong economic cooperation and to develop true European mechanisms to help those countries in difficulties – under fair conditionalities – but certainly also allowing that we’ll have growth again.
What about the question of “austerity” versus growth? This seems to be a question that challenges the very foundations of European Social Democracy. One of our commenters, Paul, argued that we should rather be seeing a “new Marshall plan” in Europe to spur economic growth. But can we afford not to make cuts in such a crisis?
The question is not about cutting or not cutting, or cutting more or cutting less. The question is: who caused this crisis? I think most of us agree today, from left to right, that the crisis did not come because governments were too big. The crisis came due to a financial market which grew out of control, and a financial bubble – the worst one we have had since the second world war. Believe me that, at the peak of the financial market, the transactions were accounting for more than 70% of the Earth’s gross national product.
What we need is a burden sharing for those that caused the crisis. That’s why I’m saying let’s begin to introduce a European Financial Transactions Tax (FTT). Not something at the global level, which we all know will take generations and generations if we’re lucky – there will always be a Bermuda or a Cayman Islands – but a true European tax which can function and will contribute in an effective way to ensure that it’s not only ordinary people who pay and it’s not only the public sector which pays, but it is truly the financial sector – who caused this crisis – who should pay. Look at the wage increases and bonus increases in the financial sector; I don’t see here a co-responsibility, and I don’t see a shared vision where we all have to contribute. I see greediness still. And without a financial transactions tax, they don’t have to pay.
We’ve also been discussing the need for a “paradigm shift” in Europe’s approach to economic growth. What does Rasmussen think about our current economic approach?
I think that, for too long, the shareholder aspect, the short-term, quarterly based exchange rate on the shares at the marketplace, has been the guide for evaluating competitiveness of firms and economies. We need to see a new paradigm based on stakeholders, where co-responsibility is playing a stronger role. If you take our new efforts, for instance, that Europe should now invest in green growth, that we should decouple the dependence between growth and energy consumption, that we should have energy-efficiency, that we should invest while we reduce the use of, for instance, nuclear energy and increase the use of wind-farms and off-shore energy; this demands an enormous amount of investment. Investments in that sector will take time before they give profits back. If this was all dependent on shareholder perspectives of a quarter, it would never be done – so we need to change our economic paradigm so we allow long-term investments in research, education and technology, thereby developing new jobs. We cannot compete [internationally] by lowering our salaries, but we can compete by increasing our knowledge and education and technology capacity. That’s what we need, and to do that we need to, in a sense, reintroduce the stakeholder perspective.
What do YOU think? Is European Social Democracy in crisis? Does the Party of European Socialists need to re-think its ideology in the face of the current crisis? Or was it rather a crisis of unrestrained capitalism that led us to where we are? Let us know your thoughts and opinions in the form below, and we’ll take them to policy-makers and experts for their reactions.