What is the essence of reforms?

by Emmanuel Bouhalakis

German Chancellor Angela Merkel has been adamant in the past 4 years of the financial crisis; Europe needs "reforms". In her own point of view, reforms mean the firm application of the Maastricht treaty convergence criteria for EU member states. One of them states that the ratio of the annual government deficit must not exceed 3% and another that the gross government debt should not be more than 60%. 

Today, there is no country in the EU that meets all the convergence criteria. One country may have its debt reasonably under control but not its inflation rate or deficit. In essence, then, the convergence criteria exist only on paper and all member states have not been able to keep them.

Germany on the other hand, as the leading economy of the EU, insists on reminding all the other states that the Maastricht treaty is not only alive but also the only means to keep the Union stable and financially disciplined. 

However, what the German government does not want to admit is the fact that the EU is by definition not the United States. There is no central government, single citizenship, single language or heritage. A Japanese person who wishes to live in America in order to become a citizen, ought to swear allegiance to the US constitution and federal authorities, plus get to know the history of the country he/she wants to be a part of.

In Europe, the cacophony of the many opinions, the total imbalance of economic power among the member states, the maze of laws and regulations that sometimes need to be ratified by national parliaments and the inability to achieve consensus even about the person for the European Commission presidency, shows the long road ahead for the development of the EU into a coherent political and economic entity.

Yet, Germany keeps pressing the weaker member states to keep implementing financial reforms. In all cases, reforms have the meaning of devastating austerity. In other words they equal to a lot less money for welfare and a lot more to be squeezed out of people through heavy taxation. For nations that do not have a heavy industry or considerable exports, that is a synonym of social catastrophe.

Strangely enough, Germany has not been able to interpret the message of the last European elections as well, in which ultranationalism and extremism is on steady rise in many countries including the UK and France which definitely do not have the huge financial woes of Greece, Portugal or Spain.

It would be wise for Mrs. Merkel to start thinking about the very wrong turn the EU has taken and together with the leaders of the member states take steps in changing the course of events. That does not mean by eternally subsidizing the weaker countries but definitely reconsidering the term "reforms". 

The European Union should not become a land of beaurocrats and accountants or statisticians but a place of solidarity and social equality. The loss of millions of jobs due to austerity will definitely turn against policymakers in Berlin or Brussels. 

The Maastricht treaty must be rewritten and together with reasonable fiscal management, the weaker countries can start developing again. Otherwise, reforms will eventually collapse.