European leaders have long insisted they will do everything to save the euro. Now, a plan is forming that would dramatically change the architecture of the European Union. Brussels would be granted a significant say in national budgets and debt would be communalized. But the hurdles such a plan might face are high.
Politics is a strange business, and one of its premier oddities is that monumental changes are rarely heralded by great speeches. Addresses indicating a shifting course tend not to be of the visionary variety. And the public attention paid to such utterances often has no relation to their far-reaching consequences.
Listening closely to Chancellor Angela Merkel in recent weeks has revealed just such a change in tone. It has been a careful shift, extremely nuanced. But it has become clear that her well-known melody is now a new one.
“We need a so-called fiscal union,” she said during an appearance on German public broadcaster ARD last week. “Which means more joint budgetary policy.” Up to that point, Merkel had merely repeated that which she always demanded. But then came the new tone: “More than anything, we need a political union,” she said. “That means that we must, step by step through the process, give up more powers to Europe as well and allow Europe oversight possibilities.”
Merkel is carefully preparing the public for the possibility that great changes are coming and that established certainties are no longer valid. Her message is that Europe only has a future when the Germans too give up large portions of their national sovereignty. That is the extent of her message, but it is plenty nonetheless.
What the Future Might Hold
Because they have been unable to find agreement, European leaders have asked top Euro-crats — European Commission President José Manul Barroso, European Council President Herman Van Rompuy, Euro-Group head Jean-Claude Juncker and European Central Bank head Mario Draghi — to come up with a plan. They hope to share some initial proposals at the European summit scheduled for the end of this month. A concrete plan is to be ready by autumn.
The four leaders have begun speaking on the phone almost daily. This week, they are to meet to agree on a common proposal that will then be sent to European capitals.
For the moment, though, the plan is nothing but sketches of how the European construction might look in the end. The ideas being tossed back and forth between Brussels, Luxembourg and Frankfurt are incomplete, but they already hint at a concept that would mean nothing less than a European revolution.
The four are intent on making the currency union irreversible, and deepening it to become a political union. A completely different Europe would emerge from such a process.
The plan envisions nation states giving up significant elements of their sovereignty to European institutions. It would mean that the European Parliament would have to fight for relevancy with a new body that would be granted important oversight functions. The result would be a two-speed Europe, the core of which would be represented by the currency union.
At the heart of the deliberations is the creation of a real fiscal union, which would prohibit member states from taking on new debt on their own. Governments would only have complete control of funds that are covered by tax revenues.
The idea developed by the Euro-crats would force governments to live within their means and to spend only that money which they take in themselves. Only then would they be able to maintain full national control of their expenditures. Should the concept work, it has the potential of transforming the current debt union into a union of stability.
The model sounds almost too good to ever come true. So far, not even Germany — which enjoys extremely low interest rates and a strong economy — has been able to get by without taking on new debt. It would also mean that even paragons of fiscal responsibility might at some point have to ask Brussels for help in the case of rising interest rates or an economic slowdown.
As a result, a significantly watered down version of the plan is already making its way through Europe’s capitals. Accordingly, only new debt which exceeds 3 percent of a country’s economic output would have to be rubber-stamped by the finance minister group.
A further chapter of the concept developed by the four Euro-crats addresses the need to inject more democracy into European resolutions. Commission President Barroso has highlighted the need to outfit a political union with democratic legitimacy. One such idea envisions the European Commission president being elected directly by European citizens. Another concept under consideration, say sources in Brussels, is that of turning the office of commission president and European Council president into one — a kind of “European president.”
Spiegel has the full article