PARIS – European Union leaders concluded 2012 with a landmark agreement that places all eurozone banks under a single supervisor. But the difficult negotiations that led to the agreement eclipsed European Council President Herman Van Rompuy’s recent report, Towards a Genuine Economic and Monetary Union, which calls for unity far beyond a banking union. Although “no door was closed,” in the words of European Commission President José Manuel Barroso, EU leaders have clearly refused, at least for now, to hold a serious discussion about deeper integration.
Van Rompuy’s report raises a fundamental question: What factors are preventing the eurozone from functioning as everyone would wish? Answering this question requires, first and foremost, comparing the dynamics at play during the euro’s first decade, 1999-2009, when the eurozone ostensibly performed well, with those of the last three years, which have been marred by crisis.