9

European Exceptionalism

PARIS – The creation of Europe’s economic and monetary union is unique in the history of sovereign states. The eurozone constitutes a “society of states” of a completely new type, one that transcends the traditional Westphalian concept of sovereignty.

Like individuals in a society, eurozone countries are both independent and interdependent. They can affect each other both positively and negatively. Good governance requires that individual member states and the European Union’s institutions fulfill their responsibilities. Above all, economic and monetary union means just that: two unions, monetary and economic.

Europe’s monetary union has worked remarkably well. Since the euro’s launch in 1999, price stability has been maintained for 17 countries and 332 million people, with average yearly inflation of just 2.03% – better than Germany’s record from 1955 to 1999. Moreover, the eurozone has created 14.5 million new jobs since 1999, compared to 8.5-9 million in the United States. This is not to say that Europe does not have a serious unemployment problem; but there is no obvious inferiority in Europe: all advanced economies must boost job creation.

Likewise, on a consolidated basis, the eurozone’s current account is balanced, its debt/GDP ratio is well below that of Japan, and its annual public-finance deficit is well below that of the US, Japan, and the United Kingdom.