Full Project – CUMULATIVE REGIONAL DECLINE, INSTITUTIONAL INADEQUACY AND THE “DEMOCRATIC DEFICIT”: IS EUROPEAN MONETARY UNION ECONOMICALLY AND POLITICALLY SUSTAINABLE?

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ABSTRACT

EMU now seems increasingly likely to progress as planned with a broad membership of eight to ten countries in 1999. The political determination of Europe’s leaders has developed a momentum that makes the birth of the Euro ever more likely. Other influential people also support the introduction of the single currency, amongst them bankers, farmers and large corporations who operate in many European currencies. Current discussions focus on the technical details of EMU: the interpretation of the Maastricht ‘convergence criteria’, speculation of who might be ‘in’ and who might be ‘out’, the re-denomination of national debts, and the operational structure of the European Central Bank (ECB). These debates deflect attention from a very much more fundamental issue of enormous importance.

This paper will examine the economic case for EMU. It will contrast the economic benefits of EMU with the dramatically important sacrifices which Member States have made by signing the Maastricht Treaty. Unless the true objective of EMU is something quite different to what we are led to believe, it is astonishing that EMU has been able to progress so far given the weakness of the economic case in its favor. It will discuss the traditional role of government in running its own affairs and will demonstrate the implications of EMU in severely restricting policy choice.

The paper will suggest that without the parallel development of other European institutions, the current design for EMU has the potential to become disordered and break down. For EMU to function in a way that genuinely benefits the people of Europe, movement towards an overt political union, however dressed up and amorphously defined, will inevitably be required.

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Full Project – CUMULATIVE REGIONAL DECLINE, INSTITUTIONAL INADEQUACY AND THE “DEMOCRATIC DEFICIT”: IS EUROPEAN MONETARY UNION ECONOMICALLY AND POLITICALLY SUSTAINABLE?