What will become of the European Union?” was the question asked by the newspaper “The Economist”, taking into account two answers: splitting or a super-state. British journal analysts have two alternatives to the crisis in the euro area: the complete disappearance of the single currency, with all the economic and political consequences, or a transfer of wealth unprecedented within the European borders, plus a waiver of sovereignty.
European leaders want to keep intact the euro area, except Greece, which is considering a possible exit, but Northern creditors, led by Germany, don’t want to pay enough to ensure survival of the single currency and southern countries have grown tired of others telling them how to live their lives. According to economists, the walk out from the crisis is a test for European integration, especially for Germany. Chancellor Angela Merkel argues, stubbornly, that the threat of euro bankruptcy is needed to keep governments on their way to reforms. But this “economic blackmail” is likely to erode confidence in the future of the euro, raise the costs of any aid to an European country and hasten a collapse, that the German official says she wants to avoid. Eventually, the option for Europe will be decided, in fact, in Berlin.
For most Europeans, the joint plan of the single currency means financial hardship and austerity. Lisbon Treaty, like the one before, have been rejected in three of six referendums, and the other 10 governments have not organized a referendum on the subject, to avoid rejection. Therefore, an acceptable alternative is considered the limited division of financial turmoil and a concession on sovereignty. Thus, the euro area would require a regional system to monitor banks (recapitalization, deposit insurance and regulation), and governments to reduce tax burden with a debt pooling.
Borderless financials
Politicians would not be able to force banks to support domestic companies or buy bonds. Banks would be Spanish or German anymore, but European, part of an economy in which monetary union has already abolished the national borders. It is a long-term plan, which experts consider less expensive than the eurozone collapse. We will see if the Germans and Dutch can be united with the Italians and Spaniards. Would be in their interest, analysts say.
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