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Analysis
A politically generous proposal

A politically generous proposal

Putting the cart before the horse

by Antonio Armellini

Fri 18 Sep 2015

German Chancellor Helmut Kohl was right: the idea of a common European currency was based on the assumption that it would kick-start an accelerated process towards political union. But things turned out differently. The present turmoil in economic and monetary union reflects the reality that the euro mantra of an ‘ever closer (political) union’ is no longer shared by all euro member states and is even less palatable to the rest of the EU.

Yet Marcello Minenna and Edoardo Reviglio, in presenting once again their ‘zero spread’ plan (15 September), start precisely from a premise that is no longer valid, when they argue that the proposed change in ECB policies should be ‘firmly anchored as part of a definite, credible and implementable goal of full-scale political union’.

Making use of the ECB to propel a stalled political process could develop into showing that the king of political union is without clothes. Flights of fancy are a constant temptation for euro enthusiasts. I can say this with some authority, since I am one of them. But such initiatives tend to end in unpleasant hard landings.

In the fragmented political climate of today’s EU, Meghnad Desai’s observations (17 September) about the negative impact in possibly encouraging euro government profligacy are especially to the point. Even if Minenna and Reviglio were able to prove that their idea would not be economically counterproductive, in political terms the argument holds: member states are loath to discussing rights and obligations of monetary union in a mutually reinforcing European perspective. Instead, they are increasingly weighed down by national perceptions and preoccupations.

Greece showed that patched up solutions may hold for a while, but can only postpone the day of reckoning. The euro’s long-term survival is tied to its members being ready to take substantive – and not merely declaratory – steps towards political union. In other words, they have to pledge to give up increasing parts of their economic and political sovereignty so as to achieve a jointly agreed (and understood) higher aim.

It is highly unlikely that all present euro member states would agree to such a move. Even those which claim to be ready – like Italy – could easily develop a bad case of cold feet. So the first step would have to be that of redefining, through changes in the European treaties, a smaller, homogeneous and politically integrated euro area.

Though not impossible, this would be a drawn out task. The proposal by Reviglio and Minenna is politically generous, but puts the cart (of economic union) in front of the horse (of political will). This is not the best way to move ahead.

Antonio Armellini was Italian Ambassador to India from 2004–08. He is member of the International Institute for Strategic Studies and Istituto Affari Internazionali. He is a member of the OMFIF Advisory Board. 

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