Quantitative easing (QE), declared by the European Central Bank (ECB), is definitely the last chance to relieve the European Union (EU). This expansionary step is, at the same time, a decisive victory of South European countries against the German-centric "old" Europe because so far Germany has hampered this move by the ECB that would pave the way for a fiscal union in the EU.
On Thursday, Mario Draghi, the ECB president, gave some important messages, and he underlined one point in particular, "This is a very significant step, but we have not yet reached the final point." In order for the ECB to come to a head, the long term refinancing operation (LTRO) should not penetrate the commodity markets by means of hedge funds, as it did in 2012.
The ECB's second LTRO of approximate 530 billion euros did not even steer for commodity markets. However, it relieved the tension of South European banks to a small extent and turned market declines into a stop-loss.
However, it failed to solve any problems in the medium or long run, including the banking system. It had one leading motive: The crisis from which the EU suffered seemed to be a simple debt crisis in appearance. However, in reality, it was a profound crisis of economic cycle that started from Germany.
In other words, Europe wanted to maintain its growth under the guidance of its sectors that were the control industry of its previous capital stock. The epicenter of these sectors is Germany. While switching from an industrial society to a knowledge-based one, European capitalism cannot display the same dynamism as it did in its previous transition from mercantilist looting to industrialism.
Particularly Germany thinks that it can carry out this transition through the old paradigm of nation-state, and therefore it withstands the idea of a fiscal union.
Toward the end of 2012, it surfaced that the European crisis was not a debt crisis but rather a problem of overcoming the paradigm of nation-state. Then European Commissioner for Economic and Monetary Affairs and the Euro Olli Rehn said that the structure of the EU needed to be changed. In accordance with this, he underlined that the fiscal union should be reconstructed.
Rehn stated that potential changes in the EU would firstly bring about a new European monetary union, which would be denominated as EMU 2.0. This new monetary union should be based on a complete fiscal structure.
Again at that time, German Minister of Finance Wolfgang Schaeuble said the ECB did not have the capability to superintend a total of 6,000 banks in the EU in the near future. Schaeuble stated: "Let alone forming a fiscal union, there is not even a monetary union. The ECB is a weak institution that is incapable of controlling the monetary system."
Schaeuble also warned that they should not pin hopes on Draghi's LTROs in 2012 and highlighted, "Germany will not approve if the ECB offers finance for state budgets."
However, there are still two alternatives for Europe in front of us. The QE, which was declared by Draghi on Jan. 5, shows us that a new Europe is still possible. The first alternative is a German-centric alliance that was established as a belated nation-state and became industrialized by relying on a statistcartel system brought by World War II. The second one is an expansionary Europe that depends on information technologies and strives to take steps to the future in the European Organization for Nuclear Research (CERN). Under these circumstances, how this process will finally be resolved is obvious.
But what is uncertain is the time of this process. We cannot settle this process by taking Europe into consideration alone. We need to look at Asia and America as well. A new plan of development beginning from China is being drawn in Asia nowadays. The balance of terror between China and the U.S. is being unveiled gradually. The trade surplus of China will no longer be used to finance the U.S. China is pursuing a new track for development, which cares about the Chinese domestic market and prioritizes public welfare. This means that China will offer capital export instead of introducing competing goods that are the products of cheap labor. The continuity of this will turn world balances upside down in a little while. At this point, the energy agreement between China and Russia is a remarkable step. For the first time since Mao, the Communist Party of China is taking sides with its public to this extent. In line with its expansion, the ECB stipulates a different condition than 2012 for banks to which it will give the LTRO: They must offer this LTRO to the real economy as a net credit.Is it possible?
Does Europe have innovative companies that can use this finance to invest in profitable areas? Can the same companies remain competitive with their Asian rivals? Europe does not provide answers to these questions, and therefore they cannot overcome the crisis even if numerous QEs are offered. Here is a true answer for these questions: The EU should incline to the East beginning from Turkey and pursue a perspective of democratic expansion. Then it will have met the Asian expansion that originates from China and heads toward Turkey to tackle its crisis.
Let me give another example: Last week, the State Oil Company of the Azerbaijan Republic (SOCAR) held ceremony for the financial closure of the Star oil refinery project in Turkey.
According to this, SOCAR will make an investment of $20 million in Turkey in the next five years. Today, the Trans-Anatolian gas pipeline (TANAP) and Trans Adriatic Pipeline (TAP) are the greatest energy investments in the world. These are the real areas of investment for which the ECB yearns.
Europe is still seeking a way to undermine Russia's weight in energy. I must say that unless the EU pulls down Germany's political and economic weight, it cannot undermine Russia. If the EU does not expand to its East, it cannot overcome the current crisis.