The Pressure for European Unity Continues

The turbulent seas of the global economy have become far too rough for a rickety patchwork of independent European states to continue as is. European Voice Magazine reported the following this morning regarding the drive for greater unity within Europe:

The leaders of the European Union‘s 27 member states are to decide next week (28-29 June) whether to launch the eurozone towards greater political and fiscal integration….

The tone of next week’s meeting will be set tomorrow (22 June) when the leaders of the eurozone’s four biggest economies, Germany, France, Italy and Spain, meet in Rome. The outcome of the European Council may depend on the extent to which François Hollande, the president of France, and Mario Monti and Mariano Rajoy, the prime ministers of Italy and Spain, can persuade Angela Merkel, Germany’s chancellor, to soften her stance against the mutualisation of debt, direct recapitalisation of banks by bypassing governments, and the creation of shared funds to stand behind Europe’s biggest banks and protect depositors.

Berlin’s resistance to the adoption of mutual debt stems primarily from German voter hostility to assuming responsibility for what they consider to be the irresponsible tax and spend policies of their Mediterranean partners (Greece, Italy and Spain). It appears, however, that moves towards a joint European assumption of individual,  national debt, are necessary if the continent is to avoid economic depression, and that Ms. Merket will be compelled to accept this to a certain degree.

However, to sell it to her domestic constituents, Angela Merkel will have to obtain concessions from the other EU states that will pacify German voter resistance to the mutualisation of debt. In this regard, it would seem that Germany favors placing their EU neighbors under greater economic scrutiny through the institution of a federal European economic government. Other EU member states have resisted this approach, seeing it as essentially a surrender of sovereignty to German influence. However, the need of the Mediterranean states to find relief for their national debt situation seems almost certain to compel them to accept Germany’s requirements that they give up national sovereignty over their economies.

Whether these initial moves next week towards greater unity within Europe will achieve a viable result remains to be seen, but it seems almost beyond question that to survive, Europe must find a way towards greater unity. In time, the pressure exerted by global financial markets appears set to increase, meaning that politicians in European capitals will remain under sustained pressure to unify their states under a federal European government.

Across the Atlantic however, it would appear that unity is also a problem. CNBC continues to report on the fragmentation of American politics, and its corrosive effect on the US economy. Thus while Europe contemplates unifying, America gets further stuck into divisive politics.

Eye on Europe




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