"With our fellow citizens increasingly astonished, concerned and agitated over Europe's inability to fight the crisis, the time has come for the European federalists in the Spinelli Group to bring the inter-governmentalist dreamers back down to earth: the euro is a single currency that cannot survive if each nation state continues to go its own way in terms of economic and budget policy.
The heads of state and government have been attempting to reconcile this impossible situation for months, without success. Their decisions are not stupid, but attempting to manage a single currency with 17 separate economic policies is like squaring the circle. Important decisions have indeed been taken since 2008, but with all the procrastination it was a matter of too little, too late – as demonstrated by the 21 July plan.
The euro zone needs tools for a genuine economic, budgetary and fiscal policy. Clearly, in the short term the support plan for Greece must be adjusted to include resources and objectives that are better geared to the state of the Greek economy. Getting Greece on the road to recovery will take time; its public administration still has shortcomings. To make the debt bearable, the burden will once again have to be shared with the private sector. A coordinated, transparent plan must be developed to recapitalise European banks in order to restore the interbank confidence critical to the financing of the real economy, and any such recapitalisation must be subject to responsible behaviour.
The construction of a modern Greek state will certainly run up against powerful vested interests that are currently exempt from taxes. The best way for the Union to support this process and ensure that everyone's interests are taken into account is for it to present a credible plan to fight fraud and tax evasion, with a special emphasis on banking secrecy and tax havens.
However, the Greek crisis is just the tip of the iceberg. The bond crisis involves several euro zone countries. The European Financial Stability Facility (EFSF) is finally operational, after being held up by political squabbling in several Member States. But the events of recent weeks have shown that such a mechanism cannot continue being subject to 17 national procedures. The Union must be given the resources it needs to react quickly and it must have its own European Monetary Fund (EMF), with greater capital and enhanced lending capacity and in which decisions are taken by a majority.
An ounce of prevention is worth a pound of cure, and that is why the Union must ultimately have a European bond market populated with eurobonds issued by a European Debt Agency. The eurobonds would be issued within the limits set out in the Stability and Growth Pact and would enable the pooling of 60% of the sovereign debt of euro zone countries. This considerable mass of liquidity should make it possible to obtain the best rating, whereas if a debt above 60% remained national it would be put under surveillance and would therefore be more expensive for the most extravagant states to refinance. That would force them to be more disciplined.
Budgetary consolidation efforts are likely to weaken the European economy at a time when it is urgently necessary to put the crisis behind us and get back on the path of growth. Compared to Americans, Europeans tend to save more. These savings can be used to finance a wide range of pan-European investments designed to modernise and thoroughly transform the European economy.
Using project bonds, the Union could build the infrastructure for education, research, renewable energy, transport and telecommunications needed to ensure a more fair and sustainable future. This effort must be enhanced by a more autonomous European budget, endowed in part by the tax on financial transactions. Moreover, a Single Act for Growth must be enacted, setting out binding and ambitious convergence criteria on taxation, pensions, employment and wages. A good balance between investment and social cohesion will have to be found in accordance with the social partners, while at the same time we must be aware that finding real solutions to the problems facing young people is an urgent priority.
To successfully complete all of these projects, the European Union must have a solid, democratic economic governance powers. Only the European Commission has this kind of legitimacy and is in a position to safeguard the general interest. The functions of the President of the Commission and the President of the European Council could be merged. The President of the Commission embodies the general interest to a greater extent – if only because he is appointed by Parliament. The scope of the office will be enhanced in 2014. Consequently, the euro zone Finance Minister should be appointed from within the Commission. He or she will chair the Euro Group, will be advised by a group of Commissioners responsible for economic policy and will represent only the euro zone and its Member States in the international financial organisations.
The democratisation of economic governance is not a luxury; it is a necessity. Given the importance of the economic and social decisions that need to be taken, European decisionmakers must be held accountable. Only a cross-border public debate will make it possible to take the various interdependencies into consideration. Accordingly, entrusting 'economic governance' to the European Council would make no sense at all.
Some of the proposed reforms can be carried out under the current treaties. Others will require changes to the treaties, if only to arrange the necessary links between the federal core of the European Union and the countries that are one day be invited to join it.
This debate is difficult, but much less difficult than it was when we launched the constitutional treaty project 10 years ago. Today, the peoples of Europe are aware that the shortcomings in European governance threaten the euro and the Union, two things to which the vast majority of Europeans are attached. The federalists in the Spinelli Group want to use this expectation of change as a foundation on which to build a stronger, more democratic Union for the future of Europe."