Critical Juncture in EU Integration?

Dueling Banjos today in RCW's afternoon edition: a Daily Mail op-ed says the Euro must end, while ex-Eurocrats counter that the Euro could be saved with further EU integration. The authors' biases are obvious enough, but what might be less obvious is that they don't actually disagree with each other.

Both articles present the separation of monetary and fiscal policy as the source of the Eurozone crisis, and they're right. If Greece and the rest of the PIIGS still had national currencies, they could mitigate the problems austerity is giving them through inflation. And if fiscal policy were at least partially elevated to the EU level, redistributive assistance to the PIIGS wouldn't be left to the caprice of national politics in Germany. Monetary integration without fiscal coordination has proved to be a dangerous half measure.


This Eurozone crisis does represent a rare opportunity for significant change in EU structure, and the EU's moments of big change have all, more or less, led down the road to further integration. As a big believer in the economic value of the Euro as a common currency, and the economies of scale inherent in European integration, I have to side mostly with the Eurocrats on this one. Chalk it up to my semester spent in Brussels last fall, but I'd like to see defense, foreign policy, and a few other state functions graduated to the EU level, with the EU receiving a larger budget from Member States to pay for it. Relax, guys, no "own resources" debate - yet.

However, it's clear that Britain is much too Eurosceptic to be an early-adopter of a plan such as this, especially as they're not even part of the Eurozone. The UK would almost certainly have to drop out of the EU to make this work. Even France, that most Euroist of Eurozone states, likely couldn't bear to part with its delusions of being a foreign policy heavyweight, especially with Sarkozy still trying to win his election.

I'd reluctantly be satisfied with new EU regulations on national fiscal policies, with real enforcement mechanisms. But even such an agreement as that would be extremely difficult to reach. It also would do nothing to address the strains put on smaller Member States by obligations such as national defense.

So, Europe, why not take the bolder step and really get integration going again? The Eurozone is a great idea, but until fiscal policy is integrated to match, the next crisis of this sort will always be a looming possibility.

And to the Eurosceptics in the UK and across the EU, as a Texan, I assure y'all that nationalism is not only possible but may in fact be even more fun as part of a federal system.