A Baltic example

The economic policy during Italy's six months as president of the Council of the European Union was primarily marked by complaining, inactivity, and blaming others. Matteo Renzi, a Social Democrat, barely affected any of the necessary structural reforms. Instead, the Council accused Germany and other stability-oriented countries in the EU of strangling the European economy with excessive austerity.

Renzi's motto seemed to be: "If only we could invest without these restrictive stability criteria."

And by "invest" of course he meant "spend," preferably other people's money. As if it wasn't decades of precisely this policy of uninhibited spending at the expense of future generations that led to today's problems. Italy currently has the second highest state debt in the EU, behind only Greece.

Stagnation - or even regression?

But there is another parallel between Italy and Greece. Following the failure to elect a new president in Athens, there is a danger that the next Greek government will be leftist, led by Alexis Tsipras, who has already announced that if he wins he will end austerity. And the polls say that result is likely.

In that scenario, it is anyone's guess what would happen to the international bailout program that guaranteed Greece 240 billion euros ($290 billion) for its financial survival.

Things aren't nearly so dramatic in Italy, not least because the country has not needed any outside help thus far. But the recently announced resignation of President Giorgio Napolitano will likely mean a further political delay in a country already struggling with blockades.

That's something which Italy, not exactly over-enthusiastic about reforms, can ill afford.

Drastic treatment

Meanwhile the mood is very different in the two countries to Europe's north. Latvia took over the Council presidency on January 1, the same day its neighbor Lithuania adopted the euro. Along with the third Baltic state, Estonia, all three have now joined a currency that many wrote off at the height of the debt crisis.

Acceding to the euro was only possible via a good - and lasting - budget as well as economic indicators. The Baltic states did not achieve those by luck. They needed tough consolidation policies carried out under their own steam, and without an EU rescue package.

Now all three countries are significantly better off than before the crisis. The sacrifices were worth it.

Warnings from Berlin

Latvia's highest priorities for its presidency of the Council of the European Union are job creation and growth. But unlike the Italian remedies, Latvia's recipe for achieving that is greater competition. This is the course it prescribed for itself.

In the cases of Italy, Greece, and also France, one always gets the impression they consider even the least external suggestion of spending discipline, structural reform, and more competition as an impertinent intervention. Especially if the warnings come from Berlin.

The Baltics, though, are much too small to be suspected of trying to dominate others. Their effectiveness comes only through their own example.

And that's exactly why they're so important for Europe.