June 2, 2011
Jean Claude-Trichet is reaching the end of his term as ECB President, which is probably the reason why felt able to say this today:
“In this Union of tomorrow, or of the day after tomorrow, would it be too bold, in the economic field, with a single market, a single currency and a single central bank, to envisage a ministry of finance of the Union?”
In a provocatively political speech in Aachen, Trichet set out some ideas on what ‘fiscal union’ inside the eurozone might actually look and feel like, particularly for eurozone governments that call on their neighbours for financial help in future.
Trichet argued that there should be a “second stage” – a point at which recipients of bailouts are no longer able/willing to implement prescribed conditions, such as austerity – where other member states i.e. those stumping up the cash for the bailout “take themselves decisions applicable in the economy concerned”:
“One way this could be imagined is for European authorities to have the right to veto some national economic policy decisions. The remit could include in particular major fiscal spending items and elements essential for the country’s competitiveness.”
Given that a growing number of people are realising that the mid-to-long-term future of the eurozone is likely to require the ‘twist or bust‘ choice between some form of fiscal union or some countries exiting, the question for the likes of Trichet is how do you sell ‘fiscal union’ to the general public.
Trichet dressed up his core message with various quotes from European philosophers and ‘fathers of European integration’ but this is unlikely to cut the mustard with the ordianry voters in Athens, Lisbon, Munich, or Amsterdam. As the FT‘s Martin Wolf noted this week, “How will the politics of these choices now play out? I truly have no idea. I wonder whether anybody does.”Open Europe blog team