ROME – The euro contagion triggered by Greece’s sovereign-debt crisis has now infected Italy. Silvio Berlusconi’s government, together with a fiscally conscious opposition, managed to secure – in only a few days – parliamentary approval of a package of measures worth more than €50 billion, in order to restore market confidence in the soundness of Italy’s economic fundamentals.
In the absence of a strong and credible EU-wide commitment to stop the contagion, other eurozone countries hit by the sovereign-debt crisis have been following a similar script. But the financier George Soros is right: Europe needs a “Plan B.” The huge crisis now hitting the eurozone and the European Union must not be wasted. It must be used to move Europe farther along the road of integration, lest the Union begin to reverse course.
When the euro was created, its architects were well aware that no monetary union in history had succeeded without the backing of a political union. Hopes nonetheless were pinned on the existence of a large, European-wide market and eurozone member states’ commitment to keeping fiscal deficits, public debt, and inflation under control. But several eurozone members did not keep their word, and the crisis engulfing their sovereign debt now endangers the survival of the eurozone as a whole.
As coordination among sovereign states has plainly not worked, only two possibilities are left. One option is that eurozone members remain sovereign and claim back their monetary powers, which implies not only the death of the euro, but also a threat to the internal market and to the EU’s very existence. The other option is to cede more sovereignty to the EU, which implies not only the survival of the euro, but also, and perhaps more importantly, the birth of Europe’s political union.