Saturday, 20 November 2010

Will the Irish crisis lead to a Federal Europe?

The IMF´s managing director Dominique Strauss-Kahn (also a likely French presidential candidate) suggests that the EU should move towards a federal state in order to avoid future financial problems:
"The wheels of co-operation move too slowly. The centre must seize the initiative in all areas key to reaching the common destiny of the union, especially in financial, economic and social policy. Countries must be willing to cede more authority to the centre."

"The [eurozone] area's institutions were simply not up to the task – even setting up a temporary solution proved to be a drawn-out process. "One [solution] is to shift the main responsibility for enforcement of fiscal discipline and key structural reforms away from the Council. This would minimise the risk of narrow national interests interfering with effective implementation of the common rules."

This may have been part of the thinking already when the common currency was launched. Many experts knew - and said it - from the beginning that the EMU without a common financial and economic policy would sooner or later lead to serious problems. The euro was therefore mainly a political project., The "founding fathers" of the euro were fully aware of the risks, but thought they were worth taking. And in case of a crisis - like the one now in Ireland - the solution might actually help to move Europe many steps closer towards a federal state - not a bad thing from a federalist´s point of view.

But what will the ever more sceptical voters think?

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