Sovereignty: time to decide

The sovereign debt crisis buffeting the eurozone will have at least one merit: that of making clear even to the most recalcitrant the fact that the simple sharing of a common currency linked to a stability pact is not enough, and that shared economic governance is now essential. Otherwise, the markets will dictate the law, while states will remain confined to trying to curb the excesses, just as they have since 2008.

When they embarked on the euro adventure, Europe's leaders probably never imagined the situation that we are now living through -- though it's true that the public debt of countries in the euro area was much lower then. Even if they did, they must have thought that their successors would surely find a way to come out on top of any crisis.

But those successors now seem paralysed, like “rabbits caught in headlights", as The Economist wrote recently. For reasons related to elections, or worse, to their lack of long-term vision, they’re incapable of taking the bull by the horns, or even of grasping the stark choice they are facing: either abandon the single currency, or beef up the powers of the Union, particularly in taxation matters.

One of the main arguments brought up by those opposed to any new transfer of powers, however, is that such a transfer would deprive them of one of the principal expressions of their sovereignty. Since the crisis erupted, though, it turns out that this sovereignty has already been severely degraded. Markets, rather than voters or party programmes, dictate the economic policies of the weakest states, and even of some of the strongest.

The most obvious case is Italy, which had an austerity plan virtually dictated to it by the European Central Bank after measures announced a few days earlier by the government failed to persuade bankers.

Under these conditions, is it better voluntarily to cede some sovereignty to institutions over which there is a minimum of democratic control, or do we prefer to rely on markets, which obey quite different rules?