24 July 2012

Janis A Emmanouilidis: Europe's ambitious muddling through

At the end of the day, "ambitious muddling through" will most likely lead to a higher degree of sui generis economic and fiscal integration (especially among eurozone countries), writes the EPC's Emmanouilidis for Project Syndicate.

In order to regain institutional coherence, legal certainty, and democratic accountability, core elements of the “fiscal compact” and any other future agreements between EU governments should be incorporated into the Union’s primary body of law as soon as possible. Moving towards a genuine Economic and Monetary Union will also require more fundamental institutional reforms. This process cannot be limited to governments, but will also have to involve the European Parliament and national parliaments in the framework of yet another European Convention.

A higher level of economic, fiscal, and political integration will also compel the amendment of national constitutions. Ratification of a new EU treaty and the adaptation of national constitutions would inevitably require referenda in a number of countries. Given Dutch and French voters’ rejection of the EU’s constitutional treaty in 2005, and European citizens’ increasing frustration with the Union and its crisis management, the outcome would be highly uncertain. But it is a risk that must be taken. Indeed, the danger of a euro implosion or a potential exit from the common currency may prove to be sufficiently strong arguments to “persuade” a majority of Europeans to vote yes.

The “ambitious muddling through” scenario will be long, bumpy, and sometimes risky, and will probably end at a destination that looks very different from today’s expectations. But, before the EU embarks on that inevitable and uncertain journey, its institutions and Member States (actively supported by the ECB!) must fashion a safety net that can protect the euro and the Union itself from hitting the ground face first when the going gets rough in the coming years.

After all, the debt crisis is likely to continue to generate immediate economic, fiscal, and market pressures. But the EU and its members will also increasingly have to cope with the collateral damage caused by the crisis – its unintended and unexpected consequences at the European and national levels.

That damage includes increasing nationalism and anti-euro/EU populism, mounting social challenges in many member countries, a growing “democratic deficit” there and in the EU, a poisoned atmosphere among EU countries, and the lack of proactive, stable leadership coalitions pushing in the same direction. All of this could lead to a standstill, which, in the current environment, would be tantamount to going backward, threatening not only European integration’s future prospects, but also its past accomplishments.

Under these circumstances, “ambitious muddling through” is both the most likely and the most promising scenario. It will not be easy, and it will not allow time for complacency, given that the EU is most likely to remain in crisis mode for some time to come. But it is probably the only way to keep Europe moving forward.

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© Project Syndicate