Following the escalation of the euro crisis and decisions taken at the EU’s last summit, especially EU leaders’ commitment to embark on the road “toward a genuine economic and monetary union,” it is high time to ask what comes next. Whatever the final outcome, the current crisis will fundamentally shape the future of European integration.
In a worst-case scenario, Europe’s sovereign-debt crisis could cause the eurozone to implode, with immediate negative effects for the EU itself. Fortunately, this scenario still seems rather unlikely — as EU countries inside and outside the eurozone seem keen to avoid the enormous economic, financial, political and social fallout that such a scenario implies. However, the danger of a fundamental disintegration has increased over time, and today such an outcome cannot be excluded.
At the same time, it seems unlikely that member states will be ready and able to make one giant leap towards a “United States of Europe” — that is, a genuine federal entity in which EU countries agree to surrender national sovereignty on an unprecedented scale.
The record since 2010 suggests that “muddling through” will remain the EU’s dominant approach for the foreseeable future. Yet, contrary to the past, the increasing existential pressures on the common currency and the constant scrutiny by markets and citizens will require bold policy responses that go well beyond the lowest common denominator.
At the end of the day, “ambitious muddling through” will most likely lead to a higher degree of sui generis economic and fiscal integration (especially among eurozone countries), including binding synchronization of national budgets, greater economic coordination and, eventually, also some limited form of debt mutualization. In other words, resolving the crisis will require “more Europe,” though the final outcome is impossible to predict, as it will result from a complex process aimed at reconciling divergent and opposing positions both within the EU and among eurozone countries.
The EU’s leaders have asked European Council President Herman Van Rompuy to develop, in close collaboration with the presidents of the European Commission, the Eurogroup, and the European Central Bank (ECB) has been tasked with devising a road map to achieve a “genuine economic and monetary union.” The final report, due to be delivered in December, should identify which additional steps can be taken on the basis of the existing EU treaties and which measures require treaty amendments.
Given the urgency of the crisis, some of the more immediate steps towards a higher level of economic and fiscal integration, which are not enforceable under the current EU treaties, might require additional intergovernmental arrangements outside of the EU’s treaty framework. Such an approach should not be a goal in itself, but it might be a necessary evil to avert the danger of a euro implosion.
However, in order to regain institutional coherence, legal certainty and democratic accountability, core elements of the “fiscal compact” and any other future agreements between EU governments should be incorporated into the union’s primary body of law as soon as possible. Moving towards a genuine economic and monetary union will also require more fundamental institutional reforms. This process cannot be limited to governments, but will also have to involve the European Parliament and national parliaments in the framework of yet another European Convention.