The Dull Man Theory of History

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E.VEN THE toughest of EU Veterans find their Treasury Ministers’ meetings difficult. “Soul-crushing” judges a regular visitor. the EUthe bean counters are not assigned their roles for their personalities. When EU Leaders meet, a sense of history being made; When the finance ministers get together, the feeling of life diminishes.

But it is the dull men and women of the European finance ministries who hold the fate of the continent in their hands. A debate about reforms of the Stability and Growth Pact, which regulates state finances in the bloc, will show the club the way for decades to come. It will show where the power is in EU really lies how it is coping with the climate crisis and whether it is EU can retain any global clout. “The history of the world is only the biography of great men,” wrote Thomas Carlyle, a 19th century historian. The future of EU will be the biography of the boring. Call it the Dull-Man Theory.

The core of the debate is simple. As it is EU Countries should have a national debt of no more than 60% GDP and a budget deficit not exceeding 3% of it. In the event of a breach, a government must devise a plan to return to fiscal sobriety. When the principles were first outlined in the 1990s, it seemed like a worthwhile goal. In 2021 it’s a bizarre joke. The average debt versus GDP in the euro area is around 100%. In Italy it is 160%. Even Germany breaks the border with 70%. Europe’s fiscal corset knows no threads.

There are a few ways to change it. The first involves changing the EUAgreement and entering targets better suited to economies hit by a financial crisis, a euro area crisis, and a pandemic in just over a decade. The second would keep 60% and 3% as the ultimate goal, but would change the speed at which countries need to meet their goals. The third option is a crafty sleight of hand. The European Commission, which is responsible for spending, could change its interpretation of the rules. A final option is not to change everything, but to allow irregular spending in certain areas such as environmental policy.

As once the great men of history fought EU‘s Dull Men are set for a long bureaucratic trench war. Those who are ahead in the coming year will say a lot about the union. An alliance of countries is against loosening the rules too much. A group of eight of these thrifty types, including the Netherlands and Austria and a mishmash of Scandinavians, Latvians and Czechs, have signed a letter that adheres to strict rules. Spread across the north and east of the continent, these countries pride themselves on healthy finances.

Your debts are small, but so are they. Taken together, the eight have a population only as big as France. Still those EU has increased the power of European tiddlers in the past. When it comes to that EUTreaty, a single country can veto it. Even if the vote is passed by qualified majority, as would be the case with the more technical optimizations, indicting the Lilliputians can still hinder progress.

On the other side of the debate, the greatest Brobding Nagians are slowly starting to get their way. A reconstruction fund of € 750 billion ($ 890 billion), including € 390 billion in grants – in effect, cash transfers from the rich EU Countries in poorer countries – was considered a victory for the south of Europe. A band of countries, led by France, Italy and Spain, pushed hardest for it. (Germany allowed it rather than supported it.) However, it was the first time in ages that Southern Europe got its way, at least from a tax point of view. If they can do the same trick with the spending rules it will suggest a more permanent postponement.

The Dull-Man theory has a tendency to compromise. Officials and wonks have a solution: instead of changing the rules, bypass them. A “green fiscal pact” would allow governments to invest freely in environmental measures, argues Bruegel, a think tank in Brussels. There would be room for maneuver for people like Olaf Scholz, perhaps Germany’s next Chancellor who has ruled out a new version of the rules.

Such offers are like that EU about compromises where anyone can claim victory. The hawks can say the rules haven’t changed; the pigeons can still spend the money. Nor would this mean a wild shift in competencies for the Commission. It has already taken on a role as fiscal Greta Thunberg, giving yes or no to government spending plans in the € 750 billion recovery fund, based in part on whether they’re green enough.

The gray men turn green

A carve-out for greens would have wider support than previous attempts to circumvent the rules. France often argued in vain that all of Europe would benefit from her military adventures should such expenses be excluded. Not all EU Countries are sending soldiers to the Sahel, but they all face huge bills if they are to cut emissions to 55% of 1990 levels, as promised. A green spending deal can certainly be made without getting too excited.

But a trickier debate will arise when climate science and economics collide. If the costs of the green transformation are limited, the fiscal space should be small. If they’re big, then a more fundamental shift in EU Fiscal policy required. A Bruegel paper suggests an additional 0.5% to 1% annual government spending GDP would be necessary; others suggest that much more is needed. The future of the planet rests in part on a battle over a few percentage points in a table.

It’s this boring fight that makes the EU‘s role in the world. EU Executives may be concerned about the global impact of the club and focus on more sexist issues like the Indo-Pacific and the bloc’s future military capabilities. But the spending debate will be more momentous. What power that EU exercises is ultimately due to its economic weight. Italy, its third largest economy, has been struggling for growth for two decades, in part because of a fiscal straitjacket. Fixing the EUThe city’s internal economic troubles – be it from green spending or diplomatic struggle – are more for them EUWorld power as its geopolitical plans. By doing EU, Dullness is destiny – and it’s the Dull Men who shape it. â– 

This article appeared in the Europe section of the print edition under the heading “The Dull Man Theory of History”


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