Blog AnalysisEconomy Euro zone

Europe suffers but holds on… (v2)

It’s not just European civil servants who are on strike… The population also seems to want to have a “European strike”

(BRUSSELS2) In the five years since the crisis lasted, the European Union has shown a certain resilience, both political and financial. Some were betting on Greece's departure from the Euro and the disintegration of the single currency. They lost. Others predicted the collapse of the European Union, this is not the case. The Cassandras, who have confused their desires with reality, are at their cost. It is worth remembering this May 9, Europe Day.

The political structures, relatively weak and often hesitant, held

After five years of crisis, political structures are emerging stronger rather than weakened. The President of the European Council, a body whose usefulness could initially be questioned, has proven its usefulness. The European Commission, asleep, had to “shake its fleas”. The deregulation process – a fad and an ideological desire rather than an economic necessity – has been frozen. And the regulation machine, and therefore harmonization, has started again. If the pace continues, the years 2012-2015 should remain in European annals as a moment of integration such as we have not experienced for 20 years.

But all is not rosy. The European system still remains largely unbalanced, favoring the financial over the economic, the economic over the social. Its political system remains in the middle of the ford. The structures resulting from the Lisbon Treaty have not all proven their effectiveness. Each of the institutions does not fully occupy the role assigned to it. The Commission, in particular, must thus find a proactive, dynamic and “intelligent” and non-ideological force (*). The “crisis reaction” system still depends too much on the atmosphere, the people, the will. And there remain organizational “holes” in the system where the executive intertwines with the legislative, and the political with the technical.

The distance from Europeans and the world

Finally, and above all, the European structure sometimes appears very, very far from daily reality. Which poses a serious problem... Because European sentiment is fraying both inside and outside. As a result, European power is weakening... We can take two very distinct indicators to account for this evolution: the attitude of the population (via the latest Eurobarometer surveys, autumn 2012) and foreign exchange reserves (via IMF statistics).

(*) his latest proposal to drain the Cypriot accounts which comes largely from Olli Rehn's team, is more than an error. It's a political mistake that should have been punished

* * *

The blurred image of Europe and a growing lack of confidence

Among the population, the image of the European Union has become blurred and degraded to a very worrying level. The fall is brutal. Five years ago, the image of Europe was mostly positive (between 45 and 52%). Only a small minority (a sixth of the population) had a negative image of it. And those who had a blurred image of it represented a third of the population.

In 2012, the negative and positive lines meet. Those who have a negative image and those who have a positive image are equal. And those who are indifferent (or don't care) clearly progress to the point of predominating. NB: Eurostat uses the word “neutral”, it is a bit usurped, to be neutral is at best to be indifferent. To have a good understanding of the problem, we can add the rates of negatives and “neutrals”. We thus see that 5 years ago, the “positives” exceeded the “neutral” + “negatives”. Today, the situation is reversed: the “neutrals” + “negatives” represent more than double the “positives”. The problem is therefore significant and rapid.

The question of confidence in the European Union confirms this development. The “trust/non-trust” lines cross in 2010. The number of people (57%) who do not really trust is almost double the number of people who do (33%). It is in the countries in crisis (Spain, Portugal, Greece, Cyprus, etc.), often pro-European, that the fall is the most brutal. But the development is also affecting other countries and not the least important ones: the Germans, the French, even the Belgians are running out of Europe.

The evolution is brutal. Five years ago, 65% of Spaniards had confidence in the EU; today 72% no longer believe in Europe, compared to only 20% who still adhere to it.

According to Eurostat figures, distrust is now in the majority in 20 EU countries (the main ones). We can thus distinguish three groups of countries where distrust prevails: those which had a certain anchored euroscepticism (United Kingdom 69%) are joined or even surpassed by those where the crisis exists (81% in Greece!, 72% in Spain , 64% in Cyprus).

Even traditionally “Euroenthusiastic” Italy has crossed the 50% distrust threshold (53% defiant against 31% confident). This feeling also exists in “rich” countries, less affected by the crisis, which fear becoming poorer and paying (59% distrust in Germany, 55% in Austria). Even Belgium, despite having a solid Europhile feeling, is starting to doubt: 51% distrust against 46%.

The European Union, in fact, today only enjoys majority confidence in seven states (trust/distrust ratio): Bulgaria (60%/24%), Lithuania (49%/37%), Poland (48%). % / 42%), Denmark (48% / 46%), Estonia (46% / 38%), Malta (46% / 34%) and Romania (45% / 40%). NB: Countries which, it must be recognized, have a secondary weight both in terms of population (barely 1/6th of the total) and economically or politically.

This is no longer enough... If there is not a rapid recovery in public opinion, the European project which aimed to “unite States and people” is in trouble. He only walks on one leg, so he hobbles, and this state of affairs can never last very long...

Another indicator: foreign exchange reserves

The single currency, the Euro (€) has ceased to be a “safe haven” currency. If we examine the IMF's foreign exchange reserve statistics (*) by putting them into ratios (percentages), we can clearly see the developments and reversals of trends produced by the crisis. The rate of foreign exchange reserves in euros in 2012 fell to just below 24%, approximately the same rate as ten years ago (2002), even before the establishment of the single currency. In 1995-1996 (if we take the cumulative volume DeutschMark-Franc-GulderNl-Ecu), it was already around 24% (*)! The entire gradual rise of the Euro (which reached a peak of 27,6% in 2009) is thus erased.

The Dollar ($) which has been constantly losing ground since the appearance of the single currency, going from approximately 71% of foreign exchange reserves in the 2000s to 62% in the 2010s, stabilizes this position around this figure ( 61,9% in 2012). However, he is not really regaining ground. Which is a sign, in itself, not entirely negative for the Euro which could, thanks to growth, regain ground.

The Pound Sterling (£), which had progressed between 2002 and 2007 (going from 2,8% to 4,7%), also stabilized its place at around 4%. Foreign exchange reserves denominated in other currencies which had fallen at the introduction of the single currency (from 4,7% in 1995 to 1,6% in 2000) and were relatively stable since (around 1,80%) are increasing rapidly since 2008, increasing by one point per year (from 2% to 6%).

(*) At the establishment of the single currency, the rate of foreign exchange reserves was 18% but this rate quickly rose in the following years to the natural low of the countries constituting the euro zone.

NB: Calculations made from 2012 figures from the “Cofer” base on the basis of “allocated” reserves. You should know that only a little more than half of the world's reserves are “affected”: allocated reserves have tended to reduce significantly since the 2000s – going from 78% in 2000 to 55% today. This figure has been relatively stable over the past three years. And 2012 is even the first year where it did not decrease but increased very slightly (55,6% compared to 55,3% in 2011)

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Please note: Students from the École Normale Supérieure and the University of Paris 1 Panthéon-Sorbonne are organizing the May 25 a day of reflection on the theme of the crises currently going through the European Union and how the EU could emerge from these crises on top. Entitled “Is the European project at a standstill?”, the conference takes place on Saturday May 25 from 10 a.m. at the National Assembly in the Victor Hugo room, Jacques Chaban Delmas Building at 101, Rue de l' university, Paris VII. The event is free but registration is required:

Nicolas Gros Verheyde

Chief editor of the B2 site. Graduated in European law from the University of Paris I Pantheon Sorbonne and listener to the 65th session of the IHEDN (Institut des Hautes Etudes de la Défense Nationale. Journalist since 1989, founded B2 - Bruxelles2 in 2008. EU/NATO correspondent in Brussels for Sud-Ouest (previously West-France and France-Soir).

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