Merkel Backs Two-Speed Europe With Core Euro in Poke at Cameron

As has been discussed in previous posts, Europe is looking like it’s heading to a two tier system economically and politically. Top tier nations will be seperated into a collective of 10 or so while the remaining will reside within a periphery system, most likely for providing cheap labor. What’s also seems will happen is the creation of a two tier currency system to go along with the two tier economy. For example we could see a Euro A class and a Euro B class form of currency. Another future possibility is the return of the Deutschmark with the core nations formally adopting it while the periphery nations holding on to the Euro. It would likely be the best option with the least damage should Europe continue pushing for further integration. Meanwhile, resistance from Great Britain indicates not all are willing to subjugate themselves to Brussels/Germany. In fact, British Prime Minister Cameron suggests this is an opportunity for the unwilling to go back to the way they were before the EU formed: Sovereign nations.

German Chancellor Angela Merkel said that she supports a two-speed European Union, with a core group in the euro pressing ahead with deeper integration and the U.K. among the others relegated to Europe’s margins. Merkel’s comments, made as she prepares to host British Prime Minister David Cameron in Berlin today, underscore her differences with the U.K. leader, who is pressing for more aggressive action by euro countries to counter the financial crisis roiling the 17-nation currency zone. “Those in a monetary union will have to move closer together,” Merkel said in an interview with ARD television broadcast today. “We have to be open. We always have to make it possible for everyone” to join. “But we must not stop because one or the other don’t want to come along just yet.” … “We need more Europe, we need not only a monetary union, but we also need a so-called fiscal union, in other words more joint budget policy,” Merkel said. “And we need most of all a political union, that means we need to gradually give competencies to Europe and give Europe control.” Ceding more control to Brussels is anathema to many lawmakers in Cameron’s Conservative Party, more than a quarter of whom defied the government in October and voted in favor of a referendum on continuing British membership of the EU. Cameron said the following month that the euro crisis offered an opportunity for powers to “ebb back” from Europe to nation states. “We should look skeptically at grand plans and utopian visions,” Cameron said then. “We’ve a right to ask what the European Union should and shouldn’t do.” Merkel, in her television interview, said that EU leaders at a summit later this month will discuss a plan to transform the EU into a political union. Still, a breakthrough can’t be achieved at just one summit, she said. “The economic and political division between the Anglo- Saxon world and the ‘Germano-sphere’ is increasing,” Fredrik Erixon, head of the European Centre for International Political Economy in Brussels, said in a telephone interview.

Full article: Merkel Backs Two-Speed Europe With Core Euro in Poke at Cameron (Bloomberg)