Acknowledging the obvious—that the Greek crisis revealed deep vulnerabilities in the euro currency union—Italy is urging full political union among euro states. Reuters reports:
The euro zone needs deeper integration to remove the risk of a member country leaving the single currency, Italian Economy Minister Pier Carlo Padoan told the Financial Times in an interview on Sunday […]“Some believe that the way it works is more or less fine with minor adjustments. I think this is not enough,” he said […]To strengthen the single currency, Italy wants a wide set of measures including the swift completion of banking union, the establishment of a common euro zone budget and a common unemployment insurance scheme
Nominally, full union is something that all euro members should be on board with. The text and spirit of the various European Union treaties have always had the formation of a new state—political union—as their end goal. German Finance Minister Wolfgang Schäuble has recently been pressing for European “economic government” featuring a common “euro budget”, for instance. But the devil is in the details, and in this case it’s likely that the Germans will not be impressed with what the Italians—and the French—have in mind.Counted by country, the eurozone leans Latin; so too by population, by almost 2:1. But the north, the countries surrounding Germany and politically and economically similar to it, produces a significantly outsized percentage of the eurozone’s GNI—about 40 percent. So even if different countries agree in theory on closer union, getting there is not as simple as just saying, “form a political union.” Think of, for example, the protracted political battles amongst the U.S. founding fathers at the Constitutional Convention over proportional or equal representation (and the U.S. states were more politically homogenous than the European nations are).When the Germans gave up their beloved Deutschmark, they did it after carefully negotiated rules were set up to protect them, and they believe that the Greek crisis and its bailout ‘solution’ have gone against those rules. They do not want to be in a eurozone in which Latin countries would have a lot of clout, and they don’t think that it’s such a terrible thing if the fear of leaving the euro helps discipline some of the union’s dodgier members.While both sides of the northern-Latin divide in principle support the notion of “ever-closer Union”, a call like this is most likely a sign of how far apart they remain.