Euro crisis: “I am not sure whether the urgency of this is fully understood in all the capitals”

It would be fair to say that there remains a difference in opinion of the correct response to the euro crisis.   The BBC quotes European Commission President José Manuel Barroso.

European governments need to agree urgently on steps to forge a closer union because of the eurozone’s “systemic problem”, the head of the European Commission says.

Commission President Jose Manuel Barroso called for a “vision of where we need to go”.

“I am not sure whether the urgency of this is fully understood in all the capitals,” he told Euro MPs.

The eurozone debt crisis will again dominate an EU summit in late June.

He has his own vision, of course

Without referring to speculation about a possible Greek exit from the eurozone Mr Barroso insisted that building a banking union and fiscal union must be done “as far as possible with all member states”.

He said further integration of the 17-nation eurozone was “indispensable”, but “under no circumstances must this be seen as an alternative to the integrity of the single market, or indeed the integrity of the union as a whole”.

“Fragmentation is not an option,” he said. The EU must continue allowing for opt-outs, such as the refusal of the UK and Denmark to join the euro, but “they remain the exception, not the rule”, he said.

And the same BBC report notes some of the reaction

There were sharply contrasting views among MEPs who heard Mr Barroso’s speech in the European Parliament in Strasbourg.

Guy Verhofstadt, leader of the liberal group ALDE, said “the problem is not Europe – the problem is not enough Europe!”. “Federal Europe is the solution.”

But the Eurosceptic British MEP Nigel Farage said: “The euro Titanic has now hit the iceberg – and there simply aren’t enough lifeboats to go round.”

For his part, the UK Chancellor of the Exchequer, George Osborne, seems to be suggesting that some people would like Greece to walk the plank…

“I ultimately don’t know whether Greece needs to leave the euro in order for the euro zone to do the things necessary to make their currency survive,” Mr Osborne said in remarks published today in the Times newspaper.

“I just don’t know whether the German government requires a Greek exit to explain to their public why they need to do certain things like a banking union, euro bonds and things in common with that.”

Meanwhile, the Irish Times picks up Bilderbergian Martin Wolf’s FT column.

If the current policies seem unlikely to work and either a federal or a transfer union is ruled out on grounds of political or economic infeasibility, what is left? I suggest the combination of two ideas: “insurance union” and “adjustment union”.

By an insurance union, I mean one that provides temporary and targeted support for countries hit by big shocks. By an adjustment union, I mean one that ensures symmetrical adjustment to changes in circumstances, including changes in financing. Both are necessary and, together, they should be sufficient to ensure a workable union in the long run. These notions would have been unnecessary if original members had been far more similar: the minimal union would then have worked. But that is not what now exists. If the euro zone is to sustain its current membership, it needs a combination of insurance and adjustment.

[And the European Project’s democratic deficit…? – Ed]  Good question.  Martin Wolf ends with this

Is it possible for the euro zone to make the needed reforms in the near-future?

I do not know. The time may now be too short and the irritation too great. But, conceptually, it seems clear what is needed: a swift and effective move towards an insurance and adjustment union. That is neither a federal union nor a transfer union.

It is a way of making it possible for countries that remain largely sovereign to share a single currency. I do not know whether even this is economically and politically feasible. But if not that, what? And if not now, when? [added emphasis]

[Full speed ahead, and damn the torpedoes political trilemma! – Ed]  Indeed.

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