Tomorrow, Monday the 10th, George Soros has planned to make a major intervention in European affairs by communicating an in-depth analysis as to the causes of the current crisis, which besides economic are political, social and systemic. Soros’ analysis will be followed by suggestions and recommendations, which are unlikely to make many happy, in particular the Germans.
The situation is quite simple. The problem of Europe is political. Soros is not a politician. He represents the Markets, or to be precise, he is the Markets. Therefore the intervention of Soros will not be political but practical and will only reflect the truth of the Markets.
On Wednesday, Jose Barroso will address Europeans with a major speech where he will announce the unification of the European banking system, or in real terms he will announce the supervision of European banks. Never is late this was due to be done more than four years ago when the then French President Nickolas Sarkozy invited Angela Merkel and other leaders and proposed exactly the supervision of EU banks (October 12, 2008). If at that time European leaders had adopted and enforced the proposals of Sarkozy there would be no crisis and there would be no need for multiple rescues.
However, to the expected Barroso proposals is likely that Germany will strongly react as all European banks and Berlin wants its small banks out of any outside control as German politicians want them flexible. Several small banks in Germany belong to municipalities and small communities and work closely with local politicians and their electoral financing. Germany claims that if all European banks are under the general control system, the mission of the European Central Bank to control over 6.000 banks in the 27 Member States will be practically impossible.
In this case the question is why President Barroso wants to further confront Angela Merkel and even more, to challenge the German banking system, which unanimously is influential with all three major political parties of Germany, CDU, SPD and CSU.
The key to the reply is with Barroso himself. Survivor, intelligent, and ambitious, we learn he is looking to get a third term, unprecedented for the European Union. The fact that Vice President Viviane Reding when recently asked, said that Barroso should get another term is only a tactical maneuver as, she has better chances than any other at the moment to become the next President. Indeed, besides having all the above characteristics of Barroso she also has the political charisma. Reding, contrarily to Barroso, who is an administrator, she is a politician, one of the few at the present College.
All in all, it seems that Barroso is probably planning to confront Germany on the matter of including small banks in his proposal so as to negotiate it, against the German support for a third term. Whether a third term for Barroso has serious chances to work, will much depend on what the European People’s Party will say and this has not been as yet clarified. However, although too early make predictions as to the new President of the Commission, Reding has better relations with Germany and the European Christian Democrats, than Barroso.
Given the high volatility of the circumstances remains important what Soros will say tomorrow (Monday the 10th of September). Certainly, it will be substantial and will contain the surprise element.
Soros may prove as the standard point of reference in an ever-turning financial world as the great majority of European politicians do not behave as politicians but as administrators. This is the real reason of the European socio-political crisis.
At this point, looking into our situation in perspective, European political leaders are proving introversive looking into their own local constituencies in securing votes and nothing else. They do see only the trees, not even the forest, while they should rise above the forest and look where the ocean is.
At the time slot, Europen political leaders are investing all their hopes in Mario Draghi, an appointed technocrat. Draghi has replaced political leaders in their jobs and is doing that very efficiently yet he is only an appointed technocrat. Draghi’s mandate is to maintain interests stability only, yet his main job has become the salvation of the Euro. For how long will he be able of doing that nobody knows. Yet if one of these days one Member State i.e. Italy, tries to raise 350 billion Euro and the markets bluff, it will have Draghi to pay and then the problem will surface. So far, Draghi is acting by necessity rather than ambitions and buys time for the politicians. For how long is difficult to say.
Bottom line the future of Europe and the Euro is in the hands of elected political leaders. They must address the people of Europe and explain to them how bad the situation is and what collective efforts and sacrifices should be made in order to get through the crisis and get Europe to flourish again. It is an issue of democratic legitimacy affecting everyday life of half a billion citizens.