The outlook for the eurozone seems fairly grim, driven in part by the debt crisis in Greece, and Portugal and to a lesser extent in Spain, the ‘property bust’ in Ireland, low consumer, investor and business confidence, as well as the current strength of the euro, which has weakened the competitiveness of export industries. These indications do not necessarily precede the collapse of the eurozone and in the event that it does occur, though it remains a rhetorical possibility at best, or that the eurozone needs to be reformed dramatically, it is certainly not a sign of doom for the EU itself. Casting aside such extreme pessimism, the malaise in the eurozone should be viewed as a window of opportunity to institute further reforms in the governance of the European monetary union and facilitate further integration efforts.
What is clear is that the crisis in the eurozone is not going away anytime soon, which means that the crisis over the European monetary union won’t be going away either. The member states created a common macroeconomic framework within which each could pursue its own national interest. This framework does not work perfectly for all member states, under all conditions, all the time. But the goal of promoting an interest that is national persists. There exists a built-in tension between the lofty goals of integration and member states’ collective unpreparedness to think through the consequences of their ambitious project. Thus, the crisis in the eurozone should foster a particular shift in the mindset of the elite policy-makers, in that economic interdependence trumps national incentives. In sum, the crisis offers the elites an opportunity to facilitate the transformative powers of European integration by governance reform of the institutions of the monetary union, and not the expulsion of member states. This will enable the shaping and constraining of the demands of national governments within a supranational arrangement, and thereby strengthening European integration.
Reverting to national currencies would not only undermine the export competitiveness of the major European states like Germany but result in collateral damage to the European Union and the single market. It is evident that moving backwards is no longer an option, and muddling through is no longer viable. It remains that the only thing left to do is to move further along the integration project and realise that the necessary consequence of monetary union within and without the context of a crisis, is greater political union.
Filed under: History, Politics, euro, European Union


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