A Further Deepening of the EU
“A crisis of confidence is a political crisis. And, the good thing is that, in a democracy, there is no political problem for which we cannot find a political solution.” José Manuel Durão Barroso, President of the European Commission, made this comment to the EU Commission on September 12, 2012, at the EU’s 2012 State of the Union address. The same day Barroso gave his address, the German Constitutional Court approved of the European Stability Mechanism (ESM), a piece of legislation designed to replace the temporary rescue funds with a permanent fund of 700 billion euros ($900 billion). These funds will provide struggling euro countries with financial assistance and may even be used to help banks. Along with the bailout funds, the European Central Bank (ECB) under the control of President Mario Draghi has decided to purchase bonds from ailing states such as Spain. The states which accept the bailout funds or who have the ECB purchase their bonds must also adhere to strict fiscal reforms. Spain has yet to agree to these reforms, realizing that large cuts may further damage its economy.
Barroso’s speech also included a message about his future vision of Europe: an “EU federation of nation-states”. Many in the EU including Mario Draghi, the ECB President, are unsure as to what such an EU federation would look like or if it is even desirable or plausible. Despite these concerns, the leaders of the EU have agreed to come up with plans for a deepening of the EU politically and economically. The plans, due sometime by the end of the year, include reforms in banking, fiscal policy, economic policy, and political institutions. In banking, the hope is to stabilize the banks via a transnational union; in the fiscal realm, to lessen and manage debt; in the economy, to increase competition and improve labor markets; and in politics, to expand democracy within the EU. The plans are still in their infancy and are quite vague, but what is certain is that the EU will soon be making changes. The goal of these changes is to create a more economically stable Europe, and to do so many of these Europeans leaders are entertaining the idea a more integrated Europe.
1. “Yes, But…” The Economist 15 Sept. 2012, Europe sec.: 49-50. Print.
2. Forelle, Charles. “EU Riddle: Will Spain Seek a Bailout?” Wall Street Journal 19 Sept. 2012, World News sec.: A10. Print.
3. “The Euro’s Autumn Renewal” The Economist 15 Sept. 2012, Europe sec: 53. Print.