Spanish bailout, Greek elections make June a make-or-break month in debt crisis
Europe's debt crisis, magnified by the Spanish bank bailout and Greek elections, puts Europe at a crossroads: move to real fiscal union, which populations don't want, or break apart. There's a way to avoid this awful choice. Build up Europe and build it down at the same time.
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As the outgoing World Bank President Robert Zoellick puts it, “Germany will not achieve its strategic aims of a more integrated and fiscally sound Eurozone unless it supports [the] reforming states.”Skip to next paragraph
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The sudden drive for core features of federalism will not be popular across the continent. According to a recent Pew Global Attitudes poll, Germany is the only country (among eight European nations) where a solid majority still believes economic integration is desirable. Everywhere else Euro-skepticism and nationalism are on the rise.
But in a union of democracies, it is “impossible to force sovereign countries to adhere to rules if their citizens no longer accept them,” as Daniel Gross from the Centre for European Policy Studies in Brussels writes.
So how can Europe’s leaders avoid the most tragic of choices: Save the euro and lose the people? Or lose the euro and cause economic mayhem?
The best answer appears to be a marriage of minimal federalism with maximal democratic control. Certainly, support for European integration is slipping because of crisis management that is seen to be inept. Conversely, success will likely drive up support.
In the long run, the 27-member European Union and the smaller eurozone will need to gain more democratic legitimacy. Reforms should not just transfer power to the unelected few in Brussels. The European Parliament needs to be further empowered and tasked with fiscal oversight. The introduction of elected office on the European level might be pondered.
But, most important, any attempt at federalizing the eurozone, even in a minimal way, needs to be accompanied by the removal of unnecessarily centralized regulation.
One of the odd characteristics of “Europe” is that it doesn’t do what it should be doing, and does what it shouldn’t be doing. Brussels has become a factory of norm setting and harmonization across the continent and beyond. The authority to regulate even the smallest details of life should be returned to the national level.
In exchange, Brussels should seek authority to gain more control over the eurozone’s fiscal affairs. The combination of devolution and centralization could, at a minimum, neutralize critics. At best, it would form the cornerstone of a modernized and newly credible eurozone that has finally overcome its crisis.