The European Republic offers reflections on the political economy of a future European constitution. It explores in particular the elusive economic and monetary policy mix that is called for within the developing framework of European integration. It explores issues of fiscal federalism and subsidiarity, contrasting voluntary policy co-ordination with the case for European government. It also balances the demands of the Stability and Growth Pact with the embryonic consensual foundations of a European welfare function.
The European Republic is part of a broader project carried out by the Bertelsmann Foundation on the impact of European Monetary Union (EMU), undertaken in cooperation with the Center for Applied Policy Research at the University of Munich. This wider project, entitled The Consequences of the Euro, focuses on the elaboration of strategic concepts for modelling a European political system that will be able to live up to the changes as well as the risks involved in handling a common currency. In doing so, both the short and long-term implications of the euro have to be investigated in the context of building an EU based on freedom and solidarity as well as economic success.
With EMU the European Union has moved a stage further on the road to an ever closer union. The introduction of the single currency, the euro, means the establishment of a common European monetary policy under the exclusive supervision of the European Central Bank (ECB). This has deepened economic integration among EMU member states and is likely to further pave the way for Political Union in the EU. However, prospects of future integration need to be explored in the light of continuing national responsibility for fiscal and economic policies. Thus, investigating the move from EMU to a Political Union has to pay attention to a wide ranging set of issues that are both national and supranational in character: institutional and constitutional arrangements, the mechanism of the European economic, social and financial order, the practical workings of EMU as well as the global stance of the EU in monetary and political terms.
Stefan Collignon is Professor of European Political Economy at the London School of Economics and Political Science (LSE).
The paper is available from theFederal Trustfor a fee.