It is 2025 and former German chancellor Angela Merkel, Europe’s first democratically elected president, is reviewing a crowded agenda for the new session of the increasingly powerful European Parliament.
The head of the European Monetary Fund is recommending a big increase in the by now well-established financial transactions and carbon taxes to fund emergency transfers from Brussels to the EU’s new Balkan members.
Merkel must also overcome lingering opposition to her proposal to re-admit Greece to the euro, 12 years after Athens pulled out of the single currency because of popular unrest over the austerity measures she had championed as German chancellor.
The ensuing financial cataclysm and economic depression galvanized the euro’s remaining members to seek shelter in what many had dismissed as unthinkable — full political and fiscal union.
If that scenario sounds far-fetched, then so does the “vision statement” prepared by four EU presidents — the bloc’s most senior officials — for last week’s EU summit.
The paper, co-authored by European Council President Herman Van Rompuy and European Central Bank (ECB) President Mario Draghi, said the eurozone should push ahead with a banking union and a budgetary union, possibly leading to the creation of a treasury office that could issue common debt.
Critically, they added, for the plan to succeed Europe’s voters must rally behind such a surrender of sovereignty. The summit tasked Van Rompuy to deliver by the end of the year a firm timetable for fiscal union.
In Portugal, which has already had to accept strict external supervision of its budget as the price of a 78 billion euro (US$97.6 billion) bailout, some regard the prospect of handing greater fiscal power to Brussels as a natural evolution.
“I would be very happy to pay my taxes to a European entity as long as those who are managing that money have more democratic legitimacy,” said Francisco Alves da Silva, 27, a mergers and acquisitions consultant in Lisbon.
That legitimacy could come via much greater sway for the European Parliament or even from the direct election of the president of the European Commission, the EU’s executive arm currently headed by Jose Manuel Barroso.
What da Silva does not want to see is decisionmaking for the whole of Europe stitched up in back room deals between Germany and France.
Like it or not, though, the scale and speed of further eurozone integration will largely come down to Berlin and Paris, Europe’s two traditional heavyweights, and whether they can reconcile their radically different concepts of “more Europe.”
Germany, the EU’s main paymaster, refuses to countenance common debt issuance to placate bond markets until other member states with weaker finances have surrendered a large degree of control over their budgets and economic policy to Brussels.
For its part, France insists that “solidarity” — getting Germany to share responsibility for debt issuance — must precede any dilution of sovereignty.
Can the circle be squared?
The outcome of the summit offered cautious grounds for optimism. In what many saw as a major concession by Germany, Merkel agreed to let the eurozone’s rescue fund inject funds directly into stricken banks from next year and intervene in bond markets to support troubled member states.
“The art of German-French friendship is to be conscious of each other’s different interests,” said Thomas Silberhorn, a parliamentarian for the Christian Socialist Union, the Bavarian sister party of Merkel’s Christian Democrats.