This week, Brussels has been asking for the power to rewrite national budgets if they do not comply with deficit and debt rules. With this power, Eurocrats would have the ability to scrap budgets written by democratically elected governments throughout the eurozone. It would be like the American Revolution in reverse: “no taxation without representation” replaced by “more taxation, less representation”. We have already seen in recent years the replacement of democratically elected governments with temporary technocratic appointments, nodded through by compliant parliaments. However, fiscal union poses a more permanent threat to Europe’s democracies.
For several months the eurozone has been stalled at a fork in the road. It either turns left and goes for full fiscal and political union, with sovereignty and national debts pooled, or it turns right and allows the eurozone to shrink by letting the weaker member states leave in an orderly fashion. Letting Greece leave the eurozone is still too big a psychological blow for the political elites who see the euro as an essential building block towards a federal republic of Europe. They also worry that it would set a precedent for other countries to leave, potentially leading to an unravelling of the eurozone.
That's why eurozone leaders are continuing to to forge an 'ever closer union'. Yet resolving the crisis seems as far away as ever because there is little appetite amongst the richer member states to accept what needs to be done. A sustainable monetary union requires fiscal transfers from the richer to the poorer or less productive areas. We need only look to the USA, where the richer states fund, via the federal government, the poorer states. This works because Americans regard themselves as American and they see their country as essentially democratically structured. Sterling as a currency union appears to work as London and the South East subsidise less productive areas of the UK, even though there is growing English resentment at being seen to subsidise parts of Scotland. But in Europe, despite the proclamations of many of my fellow MEPs, there is not a strong European identity. Having transformed their economy by going through painful economic reform, my German friends tell me they resent subsidising what they see as the less productive Greeks.