Time to choose
Euro zone governments want to save their currency. In 2012, citizens must decide whether they agree. Forget for a moment about the ECB’s bazooka or other instruments of mass disruption. Ignore Italy’s 7 percent bond yields, and debt topping 125 percent of gross domestic product. After a series of national crises or rebellions, and government changes across the European landscape, the euro zone is nearing the crucial moment when its citizens from Lisbon to Leipzig must choose whether they’re ready to do what it takes to keep the single currency alive.
The euro was a political creature from the start, willed and conceived by France and Germany to strengthen Europe after the end of the Cold War. For ten years it allowed its members to live in a soporific felicity fostered by low interest rates and markets’ insouciance. Waking up from that deceptive torpor has been painful. Austere public spending cuts and higher taxes are on the cards everywhere. The euro zone’s richest countries are being asked to help their profligate partners. And reforms designed to boost growth in the long term are perceived as heralding even more sacrifice in the short term.
Worse, pain is not perceived as being equally shared. The hard-pressed many feel they are paying for the excesses of a few. Ever-higher bankers’ bonuses jar beside pension benefit cuts. These are the issues at the core of the Occupy Anywhere movements that are meeting with sympathy in the U.S. and Europe.
Some of the citizens of the euro zone – those in Ireland, Portugal and Spain – have already voted to change their governments. The French seem ready to fire President Nicolas Sarkozy in May – though they are not yet prepared to anoint his untested and inexperienced socialist opponent François Hollande. Italians, too, should have an opportunity to choose a new government after unelected Mario Monti ends his term as “technocratic” prime minister. Most critically, many euro zone governments may submit a new EU treaty to referendums.
The euro sits at the centre of these acts of democracy. Politicians must convince citizens that a euro zone breakup would be much more painful than the reforms now under way.
Predictions: Breakingviews is publishing a series of articles over the holiday that look ahead to 2012. The pieces will be collected together in the annual ’Predictions Book’, produced in print and electronic form early in the New Year.