Mrs. Le Pen will hover over Europe threatening to become not only France’s first female president but the one who will exit the Euro or worse, the EU. These threats will not be taken lightly by markets because they risk being implemented. And even today, an increasing majority of mainstream politicians are trying to steal the populists thunder and are feeding on the weakness of the EU/Euro, with it undermining the confidence building measures required to strengthen it.
The Euro can either be abandoned or the Eurozone can federalize. These are the options. De facto the Euro crisis has already federalized the Eurozone. The transfer union and with it political leverage over each others budgets already is a reality as the Greeks have learned. Politics just isn’t brave enough to formalize the inevitable, afraid of a deserved punishment by the electorate. The electorates never entered into contract or may have mistook the intentions of the laws enacted on their behalf. But the electorate may simply have to put up with it or risk a breakup.
The Eurocrisis is far from over, it’ll be with us during our lifetimes. It is the result of failing political and cultural integration. The Euro has and will continue to exacerbate cultural differences in the Eurozone and with it will continue to undermine faith in Europe. Maybe the best option is to abandon the Euro. It’ll be messy but probably not as devastating as an exit by a core country such as France or even a default by a country such as Greece (which still remains very much a possibility). Exchange rate mechanisms can be held in place in order to manage debt. While a new ERM will be a mechanism for transfer of wealth, it will better safeguard national imperatives. Maybe it’s better to step back from the abyss than to walk into it so blindly. Wishful thinking certainly isn’t going to save the Euro.
The EU is the best that’s ever happened to Europe. At no time in history were Europeans as free, wealthy, safe, tolerant and hopeful as over the last 6 or so decades. It is as valuable in our individual lives as our next of kin. We must really keep in focus what Europe was like before the EU and that a return to such days isn’t impossible. If we had to sacrifice the Euro in order to maintain union then by all means lets be prepared to.