What Europe must do is clear. Now we must overcome the stalemate

The list of things that Europe must do to face the upcoming challenges is now clear. The problem is how to overcome the stalemate, which arises largely from the inability of member states to give up their veto power and agree to decide together.

An old English saying – “Turkeys don’t vote for Christmas” – can help to understand the problem. Translated: no one is willing to make decisions that put their survival at risk. Those who have a little power, even insignificant, if they hold on to it, are not willing to give it up. This is why European countries do not accept to decide jointly, by majority, and want to keep the right of veto.

This principle applies to all decision-making levels, especially the lowest ones of government officials or independent authorities of member countries. The consequence is that the basic agreements reached in Europe, at the level of the European Council – that is, the heads of government – ​​tend to run aground when the discussion moves to the technical level, of ministers and officials. The survival instinct of turkeys is especially at work in technical negotiations. The euro, for example, would never have been born if the decision had been left to the central banks , well aware that the single currency would have taken away much of their residual power. It took the action of bankers with a vision of the common good, like Tommaso Padoa Schioppa, to convince the political leaders that that power was now illusory and that a single currency would be in everyone's interest.

The same goes for the 2012 decision to unify European banking regulation and supervision, which had been opposed for years by national authorities and which only the 2011-12 crisis allowed to be implemented. The problem arises again today with regard to the objective of a fully integrated European financial market, with single regulation and supervision. This is an essential objective, in view of the enormous investments that Europe must make in the sectors of defense, the environment, digitalization and artificial intelligence. Investments that cannot fall only on public finances. There is also strong interest from foreign investors in European financial instruments as an alternative to the dollar. The time is therefore propitious.

The objective has been reiterated several times by the European Council , also under the pressure of the various reports presented in recent years and appeals, not least that of the President of the ECB , Christine Lagard (A Kantian shift for the Capital Market Union, 17 November 2023). Nevertheless, progress is slow. Here too, the opposition comes mainly from national authorities . It is based on the thesis according to which, unlike the monetary union, created after the currency crises of the 1980s and 1990s, and the banking union, decided after the great crisis of 2010-12, there is currently no crisis on the capital market .

In reality, the situation is much more serious . The financial markets of European countries are gradually and inexorably disappearing . Some more quickly than others. This is confirmed by the statistics on the decline in transactions and the decrease in listed companies. In a few years, only those with state participation will remain. A growing number of companies are heading towards the American market, which is larger and more liquid, where they are better valued. The funds, which are their main shareholders, are encouraging this migration.

The tax rules that the American Administration is approving will give the final blow, creating further incentives to move the headquarters of European companies across the Atlantic. In parallel, the savings flows of European countries are increasingly intermediated by operators, typically American, who are not regulated. But who have an ever greater political influence.

In short, opposition to the integration process is leading to the desertification of what remains of the European markets, in favor of Wall Street. The obstacles do not arise, as is often said, from excessive regulation produced by the European bureaucracy, but rather from national bureaucracies and policies, which cling to their remaining power to counter the simplification and harmonization necessary to create an efficient single market.

The responsibility for overcoming the stalemate lies with the highest representatives of national governments, to whom national bureaucracies answer.

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