Europe’s Market-Led Integration

Just as former Italian Prime Minister Silvio Berlusconi was brought down not by political opponents, but by jittery investors, it is the markets, not European leaders, that have opened the door to a European fiscal and political union. That is no cause for celebration.

BERLIN – For two years now, one European summit after another has ended with assurances that – at long last – the necessary measures for containing the eurozone’s sovereign-debt crisis have been taken. Most were publicly portrayed as breakthroughs, though they were nothing of the sort. As a rule, it took about three days before markets caught on and the crisis entered another round.

Because Europe’s political leaders have failed to manage the crisis effectively, the cost of ending it has risen. Indeed, an easily manageable financial crisis in Greece was allowed to grow into a life-threatening emergency for the states on the southern periphery of the European Union – and for the European project as a whole. This was statecraft at its worst, for which most of the blame can be laid at German Chancellor Angela Merkel’s door.

Indeed, prior to the European summit in Brussels in December, the stock of trust in the European Council had become so depleted that no one seemed to take its decisions seriously. Of course, it could be that the United Kingdom’s veto of the summit’s proposed changes to the EU’s Lisbon Treaty drowned out all else, while further increasing distrust on the part of the public and financial markets of a divided Europe.

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