The urgency of fiscal union and the necessity of discipline
To some extent discipline is necessary. If there's going to be a currency union with fiscal solidarity (Eurobonds, the ECB playing the role of the lender of last resort, etc.), then Member states need to be relatively sure that they're not signing an open-ended agreement to support the spending plans of other Eurozone countries without any say or safeguards from the moral hazards that might arise.
The problem is that this new fiscal compact offers no real solidarity: it's essentially a Stability and Growth Pact Plus. The economic hopes behind the deal were pinned on the reaction of the ECB, and whether it would act more as a lender of last resort (it would have been better if this was part of the deal, rather than a hoped-for side effect). The deal expresses an intention for future fiscal solidarity, but it doesn't define what the possibilities are or set a time frame for them. That said, there's 3 months to negotiate the actual treaty so the crisis and negotiations could take twists and turns that force the Eurozone to look more closely at fiscal solidarity. Still, for all the urgency for greater solidarity to make the Eurozone more politically and economically credible, some level of discipline is necessary to underline the necessary trust for the system to work. Any alternative articulated by the left needs to take account of this.
The options for fiscal union seem to be: do nothing (which doesn't seem an option, but is the default if the deal falls apart), fiscal discipline, or fiscal discipline plus some form of solidarity (from a changed ECB role to Eurobonds and a common growth strategy). The argument runs that the bail-out countries need investment and growth plans and that the new discipline entrenches the failed austerity. But where would the money come from to invest in the bail-out countries and in the countries on the edge of bailed-out-dom? The markets won't accept the level of borrowing necessary, so there would need to be more solidarity and support across the Eurozone to encourage growth. (Not to mention rhe need for democratic controls through national and the European parliaments). There needs to be a coordinated response, and therefore any alternative has to be backed up by a political coalition that could win support to advance its solution across the Eurozone. Success in simply opposing the new fiscal compact would merely keep us in the same position we're in now: there needs to be a viable alternative.
Does the Left measure up to this?
Simply put: no, not really. The Party of European Socialists (the centre-left bloc of parties) has criticised the lack of Eurobonds and changes for the ECB:
"PES interim-President, Sergei Stanishev, argued that the important elements missing from the summit decisions are granting the European bailout fund a banking licence, introducing eurobonds, introducing a financial transactions tax, and a "real plan" for investment and growth.
The European Central Bank (ECB) has also been given the possibility to provide ‘technical support’ for the European Financial Stability Fund (EFSF) and buy bonds only on secondary markets. The European Stability Mechanism is set to start in July 2012.
In summary, this draft plan is a clear and historical signal of what a Conservative majority in Europe means for ordinary people. In the past, the European Union succeeded because any advance on the single market or on monetary union was always balanced by improvements in social Europe. This is not the case this time. The absence of a growth strategy and solidarity is striking.
There is a huge risk that the absence of proposals on Eurobonds, on an EFSF banking license, and on a coherent Investment strategy, could lead to an absence of public support."
Despite making the right noises, there doesn't seem to be a full vision for what needs to be done and what shape it will take. Though the Europarties tend to be quite coherent in the European Parliament, they have a dismal track record at forming the basis of promoting new political arguments or shaping a political coalition around established arguments.
Within the Eurozone countries discussion will turn to the benefits of the deal versus the loss of sovereignty. If the choice isn't to be between the compact and what we have now, the opposition will have to organise around a credible alternative. But then there's never been a political demand within the national parties for a stronger common platform - and even with the best will in the world it would be hard to construct one ad hoc at the moment. But perhaps the PES could act as a link between centre-left parties to transmit ideas and to help some sort of consensus emerge slowly as the crisis progresses (and it's got a long way to go yet). It will be a miracle if the left can build a common theme and European alliances they can point to form a basis to their opposition, but it's necessary to form a constructive opposition.
Anyone willing to place their bets?