By David Henry
Europeans have finally found something they agree on: sovereignty. Almost no one wants to give it up.
Majorities in eight European Union countries surveyed by Pew Research Center recently opposed the loss of budgetary control to EU officials. Of the five euro-zone countries included in the study, only Italy favored increased supranational authority. In Greece, which is still flirting with bankruptcy even after forming a new government, a whopping 75 percent are against ceding control to a finance ministry in Brussels.
The English-speaking world and much of southern Europe are waiting for German Chancellor Angela Merkel to blink on common bonds (translation: "I spend, you pay"), the use of bailout funds to finance banks directly and a lender-of-last-resort role for the European Central Bank. If only Germany would just roll over, the thinking goes, the world could go back to prosperity and the problem would be solved.
The rationale is understandable. Germany is the EU's largest economy and has benefited from an export-friendly exchange rate over the past 10 years. A transfer union would also deal with geopolitical concerns: German power in Europe would be restricted by a permanent fiscal burden, while China would be prevented from fast-tracking its path to more voting rights at the International Monetary Fund by offering some of its $3.3 trillion in currency reserves to bail out Europe through the IMF. A weaker Germany is better than a stronger China.
But it's not about Germany. It's not even about Greece. Sovereignty may be the endgame for the euro as nations balk at giving up control over their finances -- and their right to national political systems -- to faceless bureaucrats in Brussels. As German Finance Minister Wolfgang Schaeuble said this week, further integration may lead to the people deciding on the EU's fate through referendums -- something that every politician surely dreads.
As a united Europe starts to look more and more like a fading dream, the most likely option appears to be a smaller club of members who trust each other enough to integrate, and a return to some national currencies. It would be very expensive, but the alternative doesn't have the support of the people.
(David Henry is a Frankfurt-based editor for Bloomberg View.)
-0- Jun/25/2012 18:49 GMT