2. Yield to pressure from those who want a return to a simple free-trade area, without a single currency and internal market. That would mean that each country would again make do with its own currency, employing competitive devaluation to get out of a short-term jam instead of adopting long-term policies that would make that country globally competitive. Just when we most need a united Europe to remain relevant in a global economy, we would be yielding to the demons of history.
3. Move forward decisively on the path toward “federalization” of economic and fiscal policies. In my view, this is the right course because it is the only way Europe can emerge from the financial crisis that grips it today and become a competitive master of its own fate in the global economy.
Logically, this federalization should further be completed with a Common Foreign and Security Policy, for which the current treaty provides sufficient authority. Here, too, there is a divergence that impedes a forceful European voice on the global stage. While polls show the European public believes we should speak as a singular entity, ambitious politicians seldom resist fanning the flames of national passions.
The European Council should lead this effort toward federalization and a single global voice, including proposing the requisite changes in the Treaties, even when it may be expected that some countries of the Union may not wish to join this development. Reticence on the part of any state should not deter the will of those who want to follow this path.
Getting out of today’s crisis and moving ahead would require implementing the following policies:
Homogenizing regulation and control of financial institutions operating in the European Union. It is ridiculous for member states to maintain different rules in this common and integrated space where financial institutions operate freely. The absence of homogenous regulation will only sow the seeds of the next financial crisis and hobble Europe in the decades ahead as it faces new competitive challenges in the global economy.