Dawn of the New Europe

On March 2, twenty-five countries of the European signed the Treaty for Stability, Coordination and Governance, the so-called Fiscal Compact setting constraints for budget policy. The UK and the Czech Republic did not sign, while Ireland will have to submit it to a popular referendum.
The aim of this treaty, pushed by Germany, is to strengthen the Growth and Stability Pact by enforcing measures that prevent government deficits from fueling national debts, which provide ammunition for speculative attacks against the euro. The new treaty will come into force after being ratified by twelve countries and calls for signatory countries to introduce a constitutional norm warranting balanced budgets within one year. Implementation will be monitored by the European Court of Justice, which will have the power to financially sanction non-complying member states.
In addition to deficits, a commitment must be made on debt, which must decline to 60% of GDP within twenty yeas. This norm, which is particularly constraining for Italy, is made more flexible by the fact that, as requested by our government, other factors will have to be taken into account, such as the situation of the business cycle, the amount of household and corporate debt etc.
The approval of the Fiscal Compact fills a gap in the Maastricht Treaty, which is clear and well-defined when it comes to monetary policy, but it is much more ambiguous when it comes to fiscal policy. This vulnerability has been harshly exposed since the financial crisis exploded in September 2008: the EU had to come to terms with the fact that its own construction was incomplete and frail in the face of financial and economic turbulence. However, if tight budgetary policy is a necessary condition for the credibility, and thus durability, of the monetary union, it must not be forgotten that the European Community has had the promotion of economic and social welfare as main objective since its beginnings in the 1950s. In fact, there has long been talk of a distinctive European social and economic model. Now it is danger, because the resources to sustain it are lacking, also due to the challenges posed by globalization.So the issue of economic growth must go back to the center of political action. As the Italian Prime Minister Mario Monti well said, after the Fiscal Compact we need an Economic Compact. In fact, not only equilibrium in public finances is harder to maintain without economic growth, but the legitimate aspirations of European citizens, especially the youth, for a better future can no longer be postponed.
Two years ago the European Commission proposed a new strategy for smart and sustainable growth, dubbed Europe 2020. It was welcome by policymakers, but now the risk is that, caught between financial rigor and the growth imperative, they put the former ahead of the latter.
The answer out of this conundrum is accelerating the process of European unification: no country, not even Great Germany, can hope to succeed alone in the globalized economy. The strong interdependence among countries developed over the course of half a century of economic dealings is a place to start, by leveraging the Single Market with investment policies that make Europe grow and make more Europe indispensable. The saddening spectacle we have witnessed over the last two years, with Europe marred by indecision and division, must be overcome by calling for more cohesion, by kickstarting a development process where stability and growth are two sides of the same coin. Absent this, the marginalization and disgregation of Europe will become inevitable.