The European Union faces important problems in various fields but it seems clear that the really vital issue is the euro. Failing to define and implement a collective foreign policy would negate forty years of efforts in that direction, impairing the capacity to defend Europe's interests in a globalised world, but it would not tear the Union apart. Reinstating border controls on the free circulation of persons, in violation of the Schengen agreements, would be an obvious absurdity, but the sort of absurdity which can easily be redressed at a later stage. A disorderly break-up of the eurozone, however, would lead to panicky protectionist measures and competitive devaluations, leading in turn to the dismantling of the single market, possibly even the customs union, in an atmosphere of mutual recrimination. That situation could not easily be redressed, and the very existence of the Union would be compromised.
That perspective explains why influential voices, beginning with that of George Soros in the Financial Times, are calling for Europeans to move on to a Plan B. I certainly support the need for urgent and coherent action on a broad front, but have some difficulty with the formulation. Talking about a Plan B seems to imply that there was a Plan A. I do not believe that this was the case.
This is not to belittle what has been done in Europe in the three years since the failure of Lehman Brothers. It is too easy to talk about politicians simply kicking the can down the road. In fact, if you combine activist leadership by the French presidency in 2008, successive Greek bailouts accepted by the German Chancellor, unprecedented intervention by the European Central Bank, cooperation with the IMF, the Financial Stability Facility and the future Stability Mechanism, the "European semester" and the "golden rule" , the confirmation of the European Council as the major locus of initiative and decision-making, on economic and monetary matters and also for the eurozone, much has been done and much has changed. But the fact is that this was not conceived as a plan, that it was not perceived as a plan, and that, had it been presented as a plan three years ago, it would most certainly have been rejected by a variety of actors for a variety of reasons. This should be kept in mind.
Yet the fact remains that if we want the sovereign debt crisis in the eurozone to be settled by governments and not simply by markets - a legitimate ambition that we should all share - a piecemeal approach will not be sufficient. We have to show that there is a pilot on board and we therefore need something conceived, and perceived, as a plan. Constituent elements of such a plan are already appearing in the European debate:
1. The aim is to establish a collective rule-making and decision-taking mechanism for macroeconomic policy and financial regulation in the eurozone. Whether it is called a treasury, a minister of finance or "gouvernance économique" is less relevant.
2. Because the mechanism would apply only to the eurozone, it should be negotiated in substance by member states that are part of that zone, which, given the pressure to which they are submitted, may well make conclusion and ratification easier.
3. However, as Wolfgang Schaüble and Angela Merkel have recently indicated, it implies a modification of treaty texts, a distasteful but inevitable prospect.
