Economic Crisis May Advance United States of Europe

                                                            Wolfgang Scheuble

                                                          Story taken from
                                                        http://euobserver.com/



       It took nearly a decade of squabbling amongst EU states, a series of referendum disasters and a last-minute game of high-stakes brinksmanship from a stubborn Czech president, but the bloc finally managed to radically refashion the way it worked with the passage of the Lisbon Treaty in 2010.


So exhausted were they by the struggle by the time the soap opera ended, European leaders then swore it would be very long indeed, perhaps a generation, before the EU treaties would be opened again.

But now, in the last few days, as Europe’s economy and the single currency stand on the precipice, these same leaders have begun to eat their words.

On Tuesday, German finance minister Wolfgang Schaeuble called for the second time in a week for changes to the treaties.

“Strengthening the eurozone's architecture ... may need profound treaty changes,” he wrote in an opinion piece for the Financial Times.

On Thursday, Schaeuble presented a plan to draft a new EU treaty to leading figures in his own party, the centre-right Christian Democratic Union, and its sister party, Bavaria’s Christian Social Union.

According to populist daily Bild, the finance minister made the argument for a major shift in fiscal policy-making powers to Brussels, a move that would almost certainly necessitate a fresh opening of the treaties holding the bloc together.

This must be done, he said, “even though we know how difficult a treaty change will be.”

The outgoing head of the European Central Bank, Jean-Claude Trichet, for his part on Monday told participants at a Paris conference that the bloc required a European “federal government with a federal finance minister."

His successor, Italian central bank chief Mario Draghi added that strengthening the European bail-out fund must be completed, "But it is not enough. Let's not forget that the crisis starts from the incompleteness of European construction.”

Targetting the multiplicity of fiscal policy approaches across the eurozone, he declared:
"We are discovering that we cannot live with this incompleteness any more."

Gerhard Schroeder, the former German chancellor on Sunday said “Countries will have to give up some of their national sovereignty.” His vision involves fiscal powers being given to the commission or a European finance minister under the control of the European Parliament as “the ultimate authority”.

“The commission will have to be turned into a government that is controlled, in parliamentary terms, by the European Parliament. That translates into a United States of Europe.”

A newly established think-tank, the Council on the Future of Europe, whose members include Schroeder, Tony Blair, former commission president Jacques Delors, former Spanish prime minister Felipe Gonzalez and economists Nouriel Roubini and Joseph Stiglitz on Monday issued a manifesto that called not just full fiscal union, but for parallel political union.

“It will be necessary to further lay out a vision of a federation that goes beyond a fiscal and economic mandate to include a common security, energy, climate, immigration and foreign policy as well as develop a common narrative about the future of the union and its place in the world,” the document read.

“Nation states will need to share certain dimensions of sovereignty to a central European entity that would have the capacity to source revenue at the federal level in order to provide European-wide public goods.”

On Tuesday, responding to the calls for a fresh treaty, the European Commission said that deeper economic integration can happen under the existing treaties, but left the door open for a more radical restructuring of the bloc, should member states feel it is necessary.

“We have taken note of the comments from a number of European leaders. They have been calling for changes to be made to the treaties to reinforce economic governance,” said commission spokesman Olivier Bailly.

“The current treaties already allow for an awful lot of possibilities to deepen economic integration. We have to make coordination better between European economies ... within the framework of the current treaties.

“If there were a need for a new legal basis for further economic governance, further integration, then that would be up to the member states to decide to make further changes to the treaty,” he continued. “But it’s hypothetical for us at the time being.”

“It’s up to them to open the treaty again.”

Speaking to EUobserver, Jannis Emmanouilidis, a senior policy analyst with the European Policy Centre, a Brussels-based EU specialist think-tank, said that moves in the direction of fiscal union and a new treaty are inevitable.

“It seems there is a growing consensus for treaty change, not just in the last few days or weeks, but this has been widening since the start of the crisis months ago,” he said.

“There is increasing awareness of just how dangerous a situation Europe is in - the potential break-up of the euro and the costs that would go along with that. They see the need to get ahead of the curve. To do that they have to go substantially further toward fiscal union."

“The question is whether this can be done under the current treaty situation, and to be able to answer that, we need a lot more details about what is being proposed," he continued.

“As to how realistic, achievable all this is, we all know what happened with the Lisbon Treaty, and the problems of domestic resistance have not gone away.”