The eurozone crisis is just getting started

The project to impose political union is bringing economic ruin, making the legitimacy of the EU project ever more vulnerable

On the face of it, they seem worlds apart. Switzerland’s referendum vote against the free movement of labour, the ruling by the German Constitutional Court on the European Central Bank’s (ECB) attempts to save the euro, and the warning to Scotland that it won’t be allowed to keep the pound if it votes for independence – these might seem unrelated, but in truth they are all part of an increasingly explosive stand-off between the forces of national sovereignty on the one hand, and political and economic integration on the other.

With elections in May likely to give rise to the most Eurosceptic parliament in the EU’s history, Europe’s long-running financial and economic crisis is threatening to spill over into an all-encompassing political one. According to Berlin and Brussels, Europe’s dark night of the soul – its most serious crisis since the Second World War – is now essentially behind us, with the promise of a slowly recovering economy and renewed political harmony to come. To my mind, it has hardly begun. Europe’s epic attempt to impose political union on widely divergent countries is being broken on the back of economic hardship, popular discontent, and financial disintegration.

Virtually all successful currency unions start with political union, and then proceed through shared insurance, institutions, and fiscal arrangements to a common form of exchange. Europe, it hardly needs saying, is trying to do it the other way round; it has forced monetary union on an unsuspecting public, and now, via the resulting financial crisis, hopes to bulldoze through the shared fiscal and political arrangements that might eventually make it work, culminating ultimately in a United States of Europe.

Last week, the German Constitutional Court did a remarkable thing; it outsourced final assessment of the ECB’s policy of doing “whatever it takes to save the euro” to the European Court of Justice (ECJ). This seemingly innocuous passing of the buck can be read two ways. To believers in the European project, it’s a positive development which removes a key threat to evolution of the single currency into a more sustainable form. Germany seems to have given up its right to veto whatever it deems to be monetary financing of struggling governments, and instead given the final say to the ECJ, which because it nearly always adopts an integrationist approach, is almost certain to give the thumbs up.

Full article: The eurozone crisis is just getting started (The Telegraph)

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