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The financial crisis now reflects a political crisis of the eurozone – one that calls into question the very existence of the European project as a whole. If Europe’s monetary union fails, not much of the common market, or of European institutions and treaties, will be left. We would have to write off six decades of successful European integration, with unknown consequences.
This failure would coincide with the emergence of a new world order, as two centuries of Western predominance come to an end. Power and wealth are shifting towards East Asian and other emerging countries, while America will be preoccupied with its own problems and turning from the Atlantic towards the Pacific. If Europeans don’t address their interests now, no one will do it for them. If Europe today does not become the agent of its own destiny, it will become the object of new world powers.
The cause of the European crisis is not three decades of neo-liberalism. Nor is it the result of the collapse of a speculation-fueled asset bubble, the violation of the Maastricht criteria, ballooning debt, or greedy banks. As important as all of these factors are, Europe’s problem is not what happened, but what did not happen: the creation of a common European government.
Unable to respond decisively to a crisis, the eurozone is losing the confidence that is any currency’s most important asset. Unless political power in Europe is europeanised, with the current confederation evolving into a federation, the eurozone – and the EU as a whole – will disintegrate. The political, economic, and financial costs of renationalisation would be enormous; an EU collapse is feared around the world for good reason.
By contrast, if the currency union’s political deficit is addressed now, first by establishing a fiscal union (a common budget and common liabilities), a real political federation will be possible. And let us be clear: anything less than a United States of Europe will not be powerful enough to prevent the looming disaster.
The eurozone needs a government, which, as things stand at the moment, can consist only of the respective heads of state and government – a development that has already started. And, because there can be no fiscal union without a common budget policy, nothing can be decided without the national parliaments. This means that a “European Chamber”, comprising national parliaments’ leaders, is indispensable.