Putting the cart before the horse

The eurozone is entering a crisis. The internal inconsistencies of the common currency area, which were disguised by the euphoric mood during the prosperous days of yesteryear, are now being propelled to the surface. Sure, individual states have problems of their own, but the most important ones are the uneven growth and the competitiveness gap among members of the eurozone. These are a great source of instability. There is enough evidence that the common currency is benefiting the most competitive economies – the German market above all. The surplus of Germany is, basically, the deficit of the European south. The euro is preventing the less competitive states from offsetting their disadvantage. Given that no member state can tolerate being undermined for too long, some will react. The ideological power of the euro can only delay this reaction but it cannot stop it. The Germans want to have their cake and eat it too. They want the eurozone, because that is where they sell two-thirds of their exports and because they like their hegemonic status. At the same time, they try to impose their own, self-serving rules. But the eurozone cannot survive through draconian measures and hefty punishments. The economic efficiency of this method is questionable for it traps economies in the vicious circle of recession. Moreover, it runs against the fundamentals of European integration: the equal participation of member states. German Chancellor Angela Merkel made her point clear, putting political pressure on the financially weaker states, raising questions as to whether Berlin can handle its power in a wise manner. However, Germany’s economic nationalism could jeopardize the eurozone as well as its long-term interests. The fundamentalists of monetarism have made the European project put the cart before the horse. By introducing a common currency without setting up a stabilization mechanism, they deepened the internal divisions. Europe needs greater political integration and common economic governance. Or the euro could cause the EU to come apart.