Euro-tragedy

I just finished working for the Annual Meetings of the IMF and the Worldbank. Just before that, I accompanied Mr Baroin, the French Finance Minister in his visit to Washington. We visited Ben Bernanke at the Federal Reserve, Tim Geithner, in his office at Treasury and Barney Frank, author of the Dodd-Frank act. I have become a frequent visitor to these offices because I have often accompanied Commissioner Barnier in his regular trips stateside. The sick patient, object of worries in Europe and in the US is the Euro. The Greek debt situation is but a symptom f a greater problem. The Europeans, in their wisdom, had, long ago, decided to build an "ever closer union". The decision to pool European coal and steel markets, later to pool agricultural, transportation, fisheries, trade, and other ressources, was as courageous as it was necessary. If the initial idea of Jean Monnet and Robert Schuman had been conceived on the smoking ruins of Europe after WWII, it has become even more urgent in a globalized worls, where France, to take an example, represents less than 1% of the world population. But a funny thing happened on the way to the forum and the ever closer union. Installed in relative comfort, the Europeans forgot all about 20 centuries of mutual destruction and , lulled by cushy welfare sttes, lost track of the European ideal. The Greek cheated in a big way, they took advantage of a strong euro to give free rein to corruption , and plain laziness. To a certain degree, the same can be said of Portugal, Italy and Spain. Now Europe is face with one of the graves decisions of its existence: Either it will disintegrate under the shock of multiple bank collapse, or it will take a mighty step forward, a leap of faith, and move resolutely toward Federalization. Only a federal state will have a federal finance ministry, a federal tax authority and a federal budget. On the minus side, the 27 Member States will lose a lot of sovereignty. On the plus side, the euro will survive, stronger, and Europe will finally be able its real weight around the global table. I remember participating , in the Borschette building of the European Commission, in the creation of the Euro, in its most minute details. What a great achievement. Unfortunately, subsequent heads of state, have been reluctant to draw the natural conclusions and go for the federal option. In order to go federal different nations should bury their pride as a small country and exchange it for the pride of belonging to one of the great actors in the world. But the Lisbon Treaty had made a great step backwards when it reduced the powers of the Commission and strenghtened those of the Council, where nation-states are busy pulling the blanket their way. This re-nationalization of the EU is at the root of today's euro-tragedy. It was no different for the young United States in 1776. And the discussions about the relative weight of the Federal and the States is far from over. The Tea Party , in the US wants to strip the Federak Gouvernment of its powers to give it back to the 50 states. (Note that, in 1972, if the States had been more powerful than the Federal gouvernment, schools would still be segregated and black and white people could not get married.) What we need are courageous politicians who put Europe above their petty glory. To quote Benjamin Franklin: "If we do not hang together, will hang separately" . And I bet the hangman will come from China.