The EMU Crisis is a Battle of Nationalism Versus Transnationalism, not Economic Prescriptions

The debate over how to save the euro and the economy of its union has taken shape around economic prescriptions. On the surface this makes sense; after all, the euro is the currency for seventeen national economies. But whether the debate’s outcome is austerity and budget controls, “pro-growth” policies, some compromise of the two, debate (and therefore the outcome) overlooks the reason for the crisis and its persistence: the nations still exist and are the most relevant actors. European Monetary Union (EMU) is a disparate collection of 17 nations whose differences, always quite present, have been made increasingly obvious by the crisis. As the nation is still the primary level of political analysis, once nation becomes central concern can a final resolution be found. The discourse is stuck in the muddled world of finance and monetary policy. Many have argued that EMU is far from an optimal currency union, and this is true. Even those who advocate for a European currency union have to acknowledge its shortcomings: restricted labor mobility, insufficient regulatory adjustments, asymmetric supply shocks. Yet proponents persist, perhaps because for first 8 years of union the economies of its members performed reasonably well, or perhaps because they view EMU as step towards a larger goal of European state, identity. These proponents rarely acknowledge issues like national interests or sovereignty while debating euro crisis because the focus has been on how to keep union together, and keeping the union together becomes significantly harder when the differing interests of the member states are recognized. Even many of the euro skeptics have backed away from putting the interests of nations ahead of the union because the potential for pain with an EMU dissolution seems too much to bear. The easier debate is therefore how to maintain the status quo, when in fact more appropriate debate, and its central question of whether the reality of EMU is best reality for individual nations, is far more important for the lives of the people living in Europe. The crisis may subside with greater fiscal integration, but it will not be resolved. Robert Mundell, father of the optimum currency zone, said in 2003 that “Money has a cultural dimension; it has been called the centerpiece of civilization. Money integration in past centuries paralleled forging of nation states, entities linked together usually by culture, language, religion, and political aspirations”. At this point in time, the countries of EMU are linked neither by culture, language, religion, nor common political aspirations, the crisis reflects this. Current EMU debates are verbalized in tactical terms: eurobonds, uniform budgetary rules, greater integration, “more Europe”. Goal of these ideas is to successfully achieve macroeconomic stabilization of eurozone economy. Given states are the most important debtors in capital markets, achieving sound regulation is prerequisite for stabilizing union, returning it to economic growth. This is the logic behind the terminology of the debate (…..)



Acerca de ignaciocovelo
Consultor Internacional


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