Eurozone crisis: Here comes the United States of Europe

5 June 2012 – The Guardian (London)

If Germany is to pay for the eurozone crisis, then fiscal and political union is the likely price. And plans for this are already being drawn up ahead of what could be a momentous EU summit on 28-29 June.

It is a measure of the speed at which the politics of the euro crisis is changing. Only a fortnight ago all the attention was being lavished on France's new president, François Hollande, being sworn in in Paris as Monsieur Growth and rushing off on his first assignment to challenge Europe's Frau Austerity, Chancellor Angela Merkel.

"We need new solutions. Everything's on the table," Hollande pledged, meaning he would force Merkel to remove the noseclip and consider things that give off a foul odour in Berlin, foremost among them eurobonds – Germany solving the crisis at a stroke by agreeing to underwrite the debt of Spain, Greece, Italy and all the rest. Fat chance.

By Saturday the growth versus austerity contest had receded as Merkel turned the tables on Hollande.

It was her turn to declare there should be no taboos in grappling with the hard options facing Europe's leaders as they wait to see what will happen in Greece and Spain, and plot their next moves at what is shaping up to be a momentous summit at the end of the month.

Merkel appeared to be calling not only Hollande's but France's bluff. By announcing there could be no censorship of the eurozone to-do list, she meant tabling radical, federalist steps involving gradual loss of national sovereignty over budgetary, fiscal, social, pensions, and labour market policies with the aim of forging a new European political union over five to 10 years.

The USE – United States of Europe – is back. For the eurozone, at least. Such "political union", surrendering fundamental powers to Brussels, Luxembourg and Strasbourg, has always been several steps too far for the French to consider.

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