Speculation over “New Europe” Mounts
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November 10, 2011 TheFreshOutlook  |
The German government had denied that it is in consultation with France over a possible trimming down of the eurozone.
Amidst the political chaos in Italy and Greece over the past two weeks, speculation has been growing that the eurozone’s primary powers are now prepared to consider an overhaul of the 17 member monetary union.
In Strasbourg on Tuesday, French President Nicolas Sarkozy told an audience of students that a “two-speed” Europe was the only viable option on the table. Such a model would espouse closer integration between eurozone member states, whilst non-members would follow a more conservative pace.
Speculation has also been rife that stronger eurozone members are considering a cut in the amount of countries that use the currency. In the past 18 months, Greece, Ireland and Portugal have all received EU-IMF bailouts after their debt problems threatened to destabilise the currency. This week, the cost of Italian borrowing rose to record levels, prompting fears that it would also need assistance. Concerns have also risen about Spain, where unemployment is staggeringly high.
Yet a French Finance Ministry spokesman has denied that any discussions to cut the eurozone are taking place.
“There have been no conversations between French and German authorities at any level on decreasing the size of the eurozone,” said the spokesman.
Such a sentiment was echoed by Chancellor Angela Merkel’s spokesman after the German leader had spoken about the need for “a breakthrough to a new Europe”.
Denying that Chancellor Merkel’s comments implied a cull of weaker eurozone members, a spokesman said: “The German government is most definitely not pursuing such plans. On the contrary, our policies are aimed as stabilising the eurozone in its entirety and attacking the root of its problems.”
The EU traces its origins to the establishment of the European Steel and Coal Community in 1951. European integration was originally designed to prevent the continent from slipping into another conflict after the devastation of the world wars. This was achieved through the pooling of “heavy” resources.
Before long, the arrangement developed into the European Economic Community. As the name suggests, it advocated greater economic co-operation between members. Political cohesion also came about in the form of European Parliament, which has been elected by direct suffrage since 1979.
The introduction of the euro in 1999 was generally seen as a success until the 2008-09 recession exposed several members’ over-reliance on borrowing.
Nevertheless, many remain adamant that European integration is a noble expression of international solidarity and also a practical facilitator of common goals.
“There cannot be peace and prosperity in north or in the west of Europe, if there is no prosperity in the south and the east” said European Commission President Jose Manuel Barroso.
Speaking in Berlin, Mr Barroso also warned of the dangers of a breakup of the eurozone: “The euro area is not an opt out from the EU. In fact, all the EU should have the euro as its currency.”
His words are likely to irk eurosceptics across the continent, not least in the UK. The coalition government has recently been faced with pressure from Conservative backbenchers to hold a referendum on EU membership.
Others, like Deputy Prime Minister Nick Clegg, would prefer to see Britain take a more prominent role in European decision making.
As such, Mr Clegg is adamant that a two-tier system would be contrary to UK interest and also would be catastrophic for the continent as a whole.
He crystallised this view on a trip to Brussels yesterday, saying: “We must move together. The greatest danger we face is division.”
By Dermot Tobin
[Image courtesy of rockcohen]
