Tuesday, June 12, 2012

EU Political Union Imminent in Wake of Financial Crisis

EU Political Union Imminent in Wake of Financial Crisis

a photo of Guy Verhofstadt Speaking at EU Parliament

Today the European Union adopted the Two Pack, which goes along with the Six Pack, which are rules and regulations that reinforce the EU’s Stability and Growth Pact (SPG), created to aid the stability of the euro.  Earlier today Guy Verhofstadt, President of the ALDE Alliance of Liberals and Democrats in the EU Parliament in a speech  called for an iron cast commitment to political union.

Verhofstadt referred to the Council’s recent agreement on a 100 billion bailout for Spanish banks as another EU firefighting action.  He stated, “we will simply continue firefighting as we do now.  One fire after the other. Greece, Ireland, Portugal, Spain, Italy.  “Verhofstadt  explained that the EU must set up a “structural and global solution to the crisis” and build a “real firewall” for the euro.  He suggested putting in place the building blocks that are necessary for a  systemic answer.

Verhofstadt proposed a banking union - with a deposit guarantee scheme and a single supervisor, which Parliament proposed two years ago and the EU did not adopt.  The second element is fiscal union including a redemption fund, which EU leaders decided on today.  Verhofstadt demanded, “we need a political union-including a real economic government.” He added, “All these three elements need to move forward.  They need a clear roadmap,  a timeline, and more important an iron cast commitment to save the euro.

While Verhofstadt called for these measures, MEP Andrew Duff  a Liberal Democrat mirrored Verhofstadt’s goals but offered another set of proposals such as the EU going forward with with a core group of members.  Liberals within the EU Parliament constitute the majority and the liberals favor political union. German Chancellor Merkel herself who resisted the idea of the EU’s political union came out days ago proposing political unification.

The EU Commission is also on tract for political union.  During Barroso’s speech he called for “ a strong ambition for Europe – an ambition for the structural reforms.” He stated, “ Such a commitment will send a clear signal that the Member States and the EU institutions consider economic and monetary union and the euro as indispensable assets for Europe's future.” Barroso called for “moving towards a banking union and a fiscal union.”

Barroso also wants to begin discussions “for the joint issuance and mutualisation of national debt in the form of stability bonds. This includes agreement on their pre-conditions, namely much more joint decision-making in all economic and budgetary matters, based on the Green Paper of November 2011. Barroso in line with the liberals stated, “A road-map and a timetable will need to be worked out that also takes into account the need to build the necessary political and democratic momentum.” Barroso added that “more coordination in taxation policy and a much stronger European approach to budgetary matters” will also need to be worked out.

According to Barroso the Union must “ link the development of the fiscal union with the development of the political union.” With the adoption of the Redemption Fund within the framework of the Two Pack, and leading EU leaders calling for the EU’s political and fiscal union and the issuance of stability bonds as a needed measure to solve the EU’s financial crisis, the EU’s political union is imminent.

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