The New Federalist proposes to take stock of the health of the euro and the scope of a monetary union in crisis. European economic governance must be reformed. At the crossroads, the European Union must choose between national withdrawals and integration of European economic policies. Which solutions are being considered and what is the relevance of a federalist view on this crisis?
The euro, a strong symbol of the European integration
Do not doubt, the euro is the spectre of European integration detractors and supporters of the national drop. It is primarily for this reason that the single currency is criticized as economic and political mismanagement of autocrats of the Frankfurt-Brussels axis. The euro is the realization of a common monetary policy.
What do they complain about? A loss of monetary sovereignty? Member States have decided to put part of their sovereignty through transfers. What about national sovereignty isolated at this time of globalization, as new economic powers like China tend to call the shots on the financial markets?
A euro too strong, then a euro too weak? The euro, which is a recent currency, needed to anchor its legitimacy in markets, today’s plunge is annotated with fright. But the euro regains its normal value, the value of purchasing power parity of the euro against the dollar is between $ 1.15 and $ 1.2, we’re getting, what is a good sign.
How to justify a return to national currencies, which in times of crisis would cause a surge in interest rates, an explosion of indebtedness, the use of devaluations or capital flight?
The Federalists denounced the political strategies of sorcerer’s apprentices, making citizens hostage to a misinformation.
A lax and inadequate coordination of European economic policies
Do not fall into the opposite extreme, there were serious problems in the early years of the euro area, that led the crisis to the extreme, particularly in Greece and Ireland. The Economic and Monetary Union (EMU) suffers sorely from shortfalls and a laxity of European leaders in European economic policy. How to think the creation of a monetary policy without effective coordination of economic policies? Today the challenge is both political and economic.
Through the German hesitations playing legal arguments, we have seen the limits of intergovernmental management which has a time amplified the crisis. The Union must establish a permanent mechanism for crisis management that gives a sense of responsibility to the States and ensure a democratic governance through the European Parliament. Initiatives such as Eurobonds, which would allow the pooling of a portion of the debt is in the right direction.
The national and discretionary management of budgetary policies has intensified the crisis, a better use of monitoring mechanisms is expected. There are also the differences in competitiveness between states that current European strategies have difficulty in targeting but also the EU’s competitiveness on the outside with a severe lack of a common strategy at major meetings such as the G20.
Member states are currently facing a major political question which will determine the viability of the European Union in the years to come.
Either they are choosing to restrict their national room for change to develop European responses matching challenges of a globalized economy, or to limit the European footprint on the national policies that may submit in a long-term perspective by economic and political choices of emerging economies.