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The Need for European Financial Solidarity

by Paolo di Gaeta
With corporate order books continuing to be well filled, the cost of oil and raw materials on the
decline, inflation now contained at around 2%, and stock markets relatively calm, the economic
outlook for the West is reasonably good despite the continuing conflicts in the Middle East and
between Russia and Ukraine.

the situation, it is inevitable that there will health, education, justice, etc.). While
be a financial catastrophy first (including a these decisions have restored national
disintegration of the single currency), to be treasuries to a certain extent, they have also
followed by an economic disaster. Lenders plunged countries into stagnation, or even
who have lost all confidence in their borrowers recession caused by a lack of investment,
will no longer extend credit, and businesses with all that this generates in terms of
will collapse. mass unemployment: the exile of young
Paolo di Gaeta In short, according to these specialists, the graduates abroad, impoverishment and a
Nonetheless, analysts and other futurists in states concerned have no choice but to go on rise in urban violence. It took at least seven
this field are all quick to agree that the level a severe diet, with all that this incurs in terms years for the economies of the hardest-hit
of state indebtedness in the countries of the of deprivation and sacrifice, if they do not wish EU member states to emerge from this
European Union's southern flank (notably to slide into a state of coma... quagmire and start moving forward again.
Italy, France, Spain and Greece, with levels This is absolutely not so according to Paolo At a time when the international economy
of commitment in excess of 100% of the Di Gaeta, a specialist in international finance. is doing rather well, we must not repeat
GDP) has now reached a point where unless the mistake of taking a remedy which is a
drastic measures are taken urgently to redress Don't Repeat the Same Mistakes superficial cure that endangers the entire
“It is not enough system. What's more, the soaring popularity
t o r u n m o d e r n across the West of populist parties on the
d e mo c r ac i e s right and the left, which thrive on the fear
using the logic of voters have of the prospect of a return to
accounting,” he austerity, demonstrates once again that
maintains. “It is this government commitment could lead
only by ensuring to social and political chaos.
the well-being of So how can we reduce public debt while
the people that their preserving business activity and quality of life?
governments can be “The only solution is through Europe,” affirms
seen as legitimate Paolo Di Gaeta. “The Union has very little debt.
and sustainable. It is therefore appropriate that its members in
Moreover, the heavy difficulty should be able to subscribe, through
austerity measures the Union, to very long-term bond issues, the
taken between 2009 proceeds of which would contribute both to the
and 2011 to remedy gradual repayment of old debts and to ensuring
the financial crisis of the financial flow required for investments
the time, following which are strictly earmarked in advance, so
the outbreak of as to guarantee market confidence in buoyant
th e “ su b p r i m e” and profitable economic activities”.
phenomenon in But does this European solidarity potentially
North America would exist among the northern members of the
be unacceptable Union who are not experiencing public debt
a second time. problems?
Decisions such as “Germany obviously needs to be able to
tax hikes, cuts in continue selling its cars and machine tools
retirement pensions to France and Italy. And Germany is not a
and social benefits, unique case. You can't do business with
as well as reductions bankrupt partners,” replies Paolo Di Gaeta.
in the resources “In an open market, debtors and creditors
© Freepik allocated to public have a common interest in ensuring that
nothing explodes...”
services (transport,
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