The former British Premier, Tony Blair called for a realignment of economics and politics as an essential step out of the Eurozone crisis, telling an audience in Berlin the crisis was so acute, “because monetary union was in many ways an idea motivated by politics but expressed in economics.”
He continued, “Countries whose economies are divergent have to converge. Since this requires a huge degree of integration in decision making, the politics will then have to shift to catch up the economics. True economic union will imply a large measure of political union.”
Blair was speaking at the Council for the Future of Europe in Berlin, Germany.
There were kind words for the German Chancellor, “who has shown great skill and courage in handling the crisis,” but he argued, “We need growth and reform. And we need liquidity, solvency and growth issues addressed together.” But he cautioned, “Without this, and especially without growth, the pain of the adjustment in debtor countries is frighteningly hard and several years of it may not be politically possible.”
He put forward his approach, “The economics imply a strategy based less on incremental steps; and more on a “Grand Bargain” agreement that deals with liquidity per the ECB; solvency with the necessary fiscal transfers; banking union; a large degree of fiscal coordination; far reaching structural reform; and the back loading not front loading of austerity plans, to protect growth - and all at once.”
This would not be easy, economically or politically, as he reminded his audience, “I bear the scars of participation in the Amsterdam Treaty, the Nice Treaty, the – Laeken process culminating in the Lisbon Treaty and the 2005 EU budget negotiation, when the UK held the Presidency - the most difficult negotiation I participated in, (even including the Northern Ireland peace agreement.)”
His experience said that there were two “crucial strategic objectives” for the future of the EU, “First, some differentiation in the speed of European integration is now inevitable as members of the Eurozone seek to match political structures with integrated economic decision-making.”
This path had dangers, he warned, “if Eurozone structures end up with a Europe that is fundamentally divided politically as well as economically; rather than a Europe with one political settlement that accommodates different levels of integration within it, the EU as we know it will be on a path to break up. “
He also had a warning for the current UK Premier, “It is massively in Britain’s interest not to play short-term politics with this issue. Personally I would like to see the UK take a constructive role in shaping this new union.”
The second objective, he argued, was to recognize why political integration had been discussed but not acted upon, but “greater political integration is indeed inevitable” and that “the union proposed for economic decision making reaches right into the heart of decisions normally reserved for national Governments and Parliaments.”
He cautioned, “Though in theory, as Europe integrates, people should demand more Europe-wide democracy, in practice, because they still feel a far closer affinity to national democracy, they don’t. The Europe political elite does. But the people often don’t. The danger is that the more we talk of “bringing Europe closer to the people”, the more “the people” feel alienated from it. “
He said that “A Europe wide election for the Presidency of the Commission or Council is the most direct way to involve the public. An election for a big post held by one person – this people can understand. The problem with the European Parliament is that though clearly democratically elected, my experience is people don’t feel close to their MEP’s. This could change but only if the European Parliament and National parliaments interact far more closely.”
He continued by suggesting that Council could be made more transparent and with stronger links with the parliament.
“We should also ask what political union really means. It doesn’t mean simply a set of institutional common bonds. It means also that in the minds of the people of Europe, there is a close connection between them. This can’t be legislated for. It has to be nurtured, culturally and socially as well as politically.”