Does Europe really need Fiscal and Political Union? | Project Syndicate

Greece’s combative former finance minister, Yanis Varoufakis, and his nemesis, former German finance minister Wolfgang Schäuble, were at loggerheads on Greek debt throughout Varoufakis’s term in office. But they were in full agreement when it came to the central question of the eurozone’s future. Monetary union required political union. No middle way was possible. This is one of the interesting revelations in Varoufakis’s fascinating account of his tenure as finance minister. “You are probably the one [in the Eurogroup] who understands that the eurozone is unsustainable,” Varoufakis quotes Schäuble as telling him. “The eurozone is constructed wrongly. We should have a political union, there is no doubt about it.”Of course, Schäuble and Varoufakis had different ideas regarding the ends that political union would serve. Schäuble saw political union as a means to impose strong fiscal discipline on member states from the centre, tying their hands and preventing “irresponsible” economic policies. Varoufakis thought political union would relax creditors’ stranglehold on his economy and create room for progressive politics across Europe.

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