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Toward a Genuine Economic and Monetary Union?

FRANKFURT – Since Europe’s Economic and Monetary Union (EMU) was created, no progress toward political unification has been made – or even really attempted. Now that Europe’s current crisis has convinced many that existing institutional arrangements are unsustainable, this may be about to change. But should it?

According to the presidents of the European Commission, the Euro Summit, the Eurogroup, the European Central Bank, and the European Parliament, the answer is yes. Indeed, in a recent report, they call for progress toward a “deep, genuine, and fair” EMU; economic, financial, and fiscal union; and a political union that provides the foundation for the rest “through genuine democratic accountability, legitimacy, and institutional strengthening.” The report echoes similar proposals by academics, journalists, and other public officials, including, most notably, French President François Hollande.

In my view, however, the report, like the proposal to establish a European finance minister, is fundamentally flawed. While the report contains a number of important observations, its underlying assumption – that steps toward all of its goals should be taken in parallel, with a genuine political union emerging at the end of the process – is problematic. After all, establishing a political union would require amendments to national constitutions and, in most countries, referendums. But voters are far from enthusiastic about the prospect of ceding more authority to Europe.

Initially, monetary union was supposed to propel Europe toward political union. But the euro is no longer a strong common currency that reinforces a shared European identity. On the contrary, it is now a source of deep resentment among European peoples – resentment that, 70 years after the end of World War II, was supposed to have been eliminated.