About one month ago, at the end of May 2017, the European Commission released its reflection paper on the future of the euro, and with it a roadmap for a more deeply integrated economic and monetary union (EMU). It is the third reflection paper in a series of five, which all originate from the Commission’s white paper on the future of Europe, issued on the occasion of the celebrations to mark the 60th anniversary of the signing of the Treaty of Rome earlier this year. Hence, this specific reflection paper on the euro should be seen and understood in precisely this context: It is a move by the European Commission intended to stimulate the general discussion on the future direction of the EU as well as to overcome the paralysis of recent years caused by continual crises.
Already at the outset it is apparent that this reflection paper on the euro is full of interesting but equally controversial ideas. Its title (‘reflection paper on the deepening of the economic and monetary union’), for example, immediately reveals what form of EMU the Commission envisages, namely a more deeply integrated one. Now, the Commission’s strong call for equipping the euro with even more tools and competences might appear astonishing to some – particularly in light of the ongoing eurocrisis. However, such a pro-integrative proposal seems to be in accordance with the institutional position of the European Commission, traditionally an institution favouring further EU integration, the apparent consensus at the highest EU level, namely that the flaws experienced during the eurocrisis can only be solved by integrating further which was already emphasised by the EU Five Presidents’ Report two years ago, as well as the intention of this reflection paper, namely to trigger critical debates on the future of the euro and with it the future of the whole EU.
At the same time, I would argue that a more deeply integrated EMU as envisaged by the Commission’s reflection paper faces at least two major challenges.
On the one hand, the required transfer of tasks and competences in the field of economic, budgetary and financial policy to the EU level is liable to trigger – even beyond any political debate – severe legal opposition. Such legal opposition was already visible during the eurocrisis within the different legal challenges that were initiated against the eurocrisis emergency measures, mainly at the national level. A prominent example in that regard is the German federal constitutional court which clearly indicated that potential future EMU reforms will have to comply with the German constitutional identity and the principle of German democracy. And, as it appears, other national constitutional actors are equally reluctant when it comes to further economic and fiscal integration. In light of such predictable legal opposition, it seems necessary to reflect as well on how a more integrated EMU could address and potentially accommodate such (national) legal challenges.
On the other hand, a more deeply integrated euro might render future EMU membership less likely. As it stands, nearly all current EU Member States – excluding Denmark and the United Kingdom – are under the legal obligation to join the eurozone. Currently, only 19 of the 28 EU Member States form part of the eurozone. The Commission explicitly mentions the existing legal obligation to join the euro, emphasising that the EMU must remain open to all EU Member States. However, the prospect of joining a eurozone with increasing competences, a eurozone that is able to scrutinise national budgeting and domestic economic policies might hardly appear to be an enticing option for potential candidates. Thus, a more deeply integrated euro will most likely result in national reluctance to join the eurozone. Here again, further reflection might be needed on how eurozone membership might become more ‘attractive’. One way is, of course, a thriving euro. An additional way might be to involve national parliaments to a lager extent in the eurozone decision-making process to strengthen the dialogue between national and EU level, as well as to address concerns related to the principle of democracy in a more deeply integrated EMU. Currently, it is questionable to say the least whether non-eurozone Member States are willing to jump on the Commission’s envisaged moving euro-train.
To my understanding, both challenges outlined illustrate the need for further reflection and debate. The European Commission initiated the required discussion by releasing the reflection paper on the deepening of the economic and monetary Union, thereby facing a difficult crossroads leading towards either a more or less integrated EMU. The Commission decided – maybe quite naturally – to advocate the path towards a more deeply integrated euro.
Now, it is crucial that this discussion initiated on the euro, but equally the discussions initiated by the four other reflection papers, reach European society – and with it EU citizens, national institutions as well as domestic constitutional actors. In the end, the entire EU – including all its Member States – will have to face the crossroads outlined above and make the decision whether the way forward leads towards more or less Europe.