“Welcoming those who flee is a humanitarian imperative, both for us and for Europe. The politics of walls and fences, of roofs and limits, has no future”. Thus, Angela Merkel opened the CDU congress last Sunday. But, then you added, also to convince and, above all, reassure the most skeptical within your party: "We must reduce the number of arrivals and this is only possible together with the Europeans". An explicit and clear request for cooperation. Because if the chancellery is convinced that the "open door" policy is the only possible alternative to solve the problem of migrants, it is well aware that in order to implement the riskiest decision it has ever taken in ten years at the helm of the German government, Germany cannot be left alone: collaboration and solidarity must also come from the other states of the Union.
Angela Merkel it therefore finds itself in the condition - certainly not frequent - of being forced to seek help from Europe. In exchange, you could accept compromises on other fronts, such as that of governance European Union, in particular, the fiscal policy indicated in the Report of the Five Presidents. And, then, what could be the strategy to be adopted by Italy and France, two countries that are making the discretionary – and not rigid – interpretation of budgetary rules – a central point of their European agenda? There are basically two possible scenarios.
The first scenario is a short-term compromise in which France and Italy continue to ask for greater budgetary margins, making the best use of the flexibility clauses envisaged in the communication from the European Commission last January. The latest example in this sense is the request made by Prime Minister Valls, in the aftermath of the Paris attacks: "the security pact comes before the stability pact" declared the French premier.
Also Matteo Renzi, took advantage of the terrorist attacks in France to ask for further flexibility, despite the fact that Italy is, to date, the country that has made the most use of the aforementioned clauses: between 2015 and 2016, the government asked for almost 16 billions of euros of minor cuts in the structural deficit by invoking all the available clauses: that of reforms, investments and “Exceptional Circumstances” which, at first, should have been linked to the expenses for migrants (to finance the cut in IRES) but which the premier then decided to justify with higher expenses for security.
For Angela Merkel it will not be easy to accept greater fiscal flexibility in the absence of a clear and measurable impact on the potential growth, and therefore on the public finances, of the state that requests it. for theItaly, which has a public debt that exceeds 130 percent of GDP, continuing to postpone fiscal adjustment means becoming more vulnerable in the event of tensions on the financial markets and a slowdown in the global economy: an eventuality that scares Germany, always very careful not to run the risk of having to foot the bill for the others. And then, from the point of view of the Germans, granting greater budgetary margins does not help strengthen the construction of Europeif anything, the opposite, especially if not accompanied by the continuation of the reforms started. Therefore, this first scenario would not represent a desirable compromise for the Chancellor: too costly in terms of credibility.
A compromise in which Italy and France, instead of focusing on the short term, decide to implement a strategy with a longer time horizon would be different. They could, for example, ask Germany lintroduction of the European deposit guarantee, the third pillar that is missing from the Banking Union. Until today, Berlin has always opposed it because it wants to be sure that before pooling risks (“risk sharing”), EU countries have taken action to reduce risks (“risk reduction"). The fear is always the same, namely that of having to shoulder the failure of other people's banking systems.
Angela Merkel, however, at this moment, could agree to make progress on the common deposit guarantee. And not just because she's in one weak position on the immigration front, but also because it would in any case be a question of a path that sooner or later will have to be followed in the process of European integration. For a stateswoman like Merkel, who aspires to win elections in 2017 and govern for a fourth term, completing the banking union would be a clear sign of her commitment to building – in deeds and not words – European political union .
The choice between a short-term compromise ("greater budgetary flexibility") and a medium-long term one ("greater banking integration") largely depends on Italy and France. For Italy, in particular, the introduction of a European deposit guarantee could represent a fundamental contribution to reassure savers, in a delicate phase of managing the recent banking difficulties. Instead, insisting on short-term flexibility could prove to be a short-sighted strategy.
