More Leadership for More Europe

Any assessment of European economic governance must acknowledge the slow, contradictory nature of intergovernmental decision-making, in which national assertion, fueled by upsurges in popular anti-EU sentiment, has led to a stop-and-go process. Viewed in these terms, Europe's political class has failed to lead.

MILAN – The debate about improving economic governance within the eurozone is shedding new light on the system’s weaknesses. It was already evident when the Maastricht

Treaty was signed in 1992 that a monetary union without something similar in the fiscal domain would be unsustainable in the long run. Then, for the common currency’s first decade, that fundamental flaw was papered over.

Now the eurozone – with a centralized monetary policy, run by the European Central Bank, alongside 27 national fiscal policies – has come to look like a mockery of economic common sense. Early on, important states like France and Germany stopped taking seriously the European Union’s Stability and Growth Pact (SGP), which was supposed to guarantee fiscal discipline and coordination among the member states.

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