BERLIN – Slowly, word is getting round – even in Germany – that the financial crisis could destroy the European unification project in its entirety, because it demonstrates, quite relentlessly, the weaknesses of the eurozone and its construction. Those weaknesses are less financial or economic than political.
The Maastricht Treaty established a monetary union, but the political union that is an indispensable precondition for the common currency’s success remained a mere promise. The euro, and the countries that adopted it, are now paying the price. The eurozone now rests on the shaky basis of a confederation of states that are committed both to a monetary union and to retaining their fiscal sovereignty. At a time of crisis, that cannot work.
At the beginning of the crisis, in 2007-2008, the eurozone’s fundamental flaws could have been corrected had Germany been willing to support a joint European crisis response. But German officials preferred to maintain national primacy – and thus a confederational approach to Europe.
Throughout history, confederations have never really worked, because the question of sovereignty (and thus of power and legitimacy) remains unresolved. The United States is a case in point. After winning independence, the American colonies united loosely under the Articles of Confederation. But that arrangement failed financially and economically, and the US soon moved towards a full federation.