As the dust settles on last night’s historic separation of European paths, leaving the UK more isolated in the region then they have been in decades, its worth noting what this new treaty will mean for the countries at the heart of so much of the fiscal crisis shadowing the region – the Mediterranean. After all, the calls for greater financial oversight and reporting included in this new version of the EU treaty will have the quickest and most substantial effect in those countries already struggling to keep afloat, mainly Greece, Italy and Spain.
With the UK choosing to step back from the continent late last night, it appears more and more likely that these calls will be answered, resulting in a more economically integrated Eurozone, complete with constitutional limitations on debt, centralized budget approval and if a confidential paper leaked earlier this week has any truth to it, new levels of authority over austerity and spending in the hands of Brussels. For governments in Athens, Rome and Madrid, this step is unlikely to faze anyone already trying hard to introduce economic adjustments to fit EU demands, though it is certain to make their work much, much harder.
With parliaments in two of these countries weighed down by claims of illegitimacy from those fighting so hard against further cuts, any additional push to centralize EU authority over individual economies is sure to meet with resistance. Already derided as puppets of Merkel and Sarkozy, Italy’s Mario Monti and Greece’s Lucas Papademos by political opponents, these PMs are unlikely to find much support for handing over even more authority to Brussels, even if it means a slower path to restoring confidence. To be sure, these heads of state will likely join Spain’s Rajoy in embracing this new treaty and will ultimately be successful in garnering an acceptable level of support from populations that see closer integration as a necessary and logical next step to sustaining their position in the Eurozone and really the Euro altogether. Still, those already worried about salvaging state sovereignty within the EU are sure to push back on the floors of parliament and on the streets, making the path ahead a difficult or at least contentious one.
Further complicating these new leaders’ path forward is the fact that this treaty will be unlikely to have any real impact on the region’s immediate economic situation. That particular ship has already set sail. Regardless of what confidence-building efforts come from this new effort, there will be slower or non-existent growth rates from Lisbon to Athens next year, inviting further difficult cuts and unpopular decisions. It is no longer a question of if anything can be done to avoid another slowdown, but one of how long the inevitable slowdown will last.
While the lingering slow growth and possible recession may actually provide a more supportive setting for handing over control to anyone but the local leaders that got them into this mess, it is likely going to come at the expense of what little faith regional voters have in their national governments. Frustrated with what they see as a lack of clear choice when it comes to existing political parties, voters in Spain, Italy and Greece have turned their attentions towards regional parties, casting protest ballots or simply not voting at all.
A domestic loss of confidence aside, the new treaty could at least provide a somewhat concrete path forward for countries so weighed down by uncertainty for so long.
Image: Noticias de Gipuzkoa