The mini-summit of heads of state and government held on Saturday at the Elysee is not necessarily what Nicolas Sarkozy had hoped for. However, despite the necessary compromises that are so characteristic of the way the Union works, the President of the Republic can boast of a genuine success.
Certainly, this meeting did not lead to the formulation of a “Paulson plan” à la European, with more visible effects of stabilization and revival for a market in search of direction, and merely invited Member States, left free to “take their responsibilities at the national level,” to better coordinate their actions. Nonetheless, this “G4” managed to make the “solemn commitment” to support financial institutions in difficulty. It was also an opportunity, in these “exceptional circumstances,” to appeal to the flexibility of the Brussels Commission regarding the stability pact rules, as France dangerously approached the 3% threshold of public deficits in relation to GDP.
Although the dogmas of the European Union were less disrupted than anticipated, the principles of finance, on the other hand, underwent a significant overhaul. In the absence of immediate solutions to a crisis, the troublemakers, at the root of the failures of financial institutions, found themselves—possibly due to the joint determination of Nicolas Sarkozy and Angela Merkel—under the scrutiny of this summit. The “sanctions for those responsible” that will henceforth accompany the “public support for a bank in difficulty,” the end of “golden parachutes,” one of the prescriptions of a code of good economic governance expected to be announced early in the week by the president of Medef, certainly do not constitute the keys to a financial rescue of the planet. However, these measures have the merit of addressing the deep frustrations and silent anger of the populations who, one way or another, will be called upon to repay these failures that are systematically socialized, unlike the profits, which are always privatized. More importantly, they could define the philosophy of the next “world conference” wished for by the current President of the Union that is supposed to lead states to better control, from banking transactions to risk assessments, all areas of finance. A return to a situation that some had considered—after the consecration of globalization in 1989—as immutable… and reassuring.
However, three shadows loom over this idyllic picture. First, it is hoped that the markets do not interpret this concentration of coercive measures on humans as an admission of powerlessness over structures. Will international financial logics—as volatile as those of compensations from abroad—agree to submit to this new form of ethics? Secondly, one must hopefully—naively?—bet on European solidarity, wishing that the 23 other Member States will ratify these orientations at the next European Council on October 15. Among the frustrations of those European countries not invited to participate in the Paris meeting, those who, like Ireland, prefer to act solo, and those whose good growth rates do not encourage them to follow this stringent regime for their entrepreneurs, an intense effort of clarification will need to be made by the French presidency to convince potentially reluctant partners. Finally, just as the American President acknowledged that the adoption of the Paulson plan “would take time to relieve” the economy, there is concern that the European countries, even swift to react under the French impulse, may not be able to immediately come to the aid of businesses and individuals caught in the crisis spiral. The banks struggling to find financing for more than 24 hours and the savings bank clients anxiously questioning counter employees reveal the anxiety-inducing risks of a gap between announcements and expected effects. To use stock market vocabulary, while markets play on “anticipations” and “futures,” consumers, for their part, pay “in cash and by the day.”
