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The award of the Nobel Peace prize underlines the dramatic consequence that could flow from a failure.
Council President van Rompuy’s Interim Report to the Heads of State/Government (HOSGs) is a powerful document but the key question remains about how much of it is already agreed by the HOSGs, rather than simply being a consensus of the four Presidents (Council/Commission/Eurogroup and Bank). The intense bilateral discussions with the Member States point to it already having some substantial measure of support. My annotations on the document – see attachment – show that this has the potential to trigger a historic change in the nature of the euro area as it consolidates into a single political union. The facts on the ground of existing economic governance agreements already make it very clear that the euro area is already in a de facto political union.
If the HOSGs agree to the preparations of a detailed proposal along these lines, then the exact shape of it will define that new political union quite precisely. How it will deal with the `out’ states will be one of the thorniest issues. The report talks of being `fair’ but that also means fair to the `ins’ – so there can be no question of an effective veto by the `outs’.