Europe Needs Democratic Rejuvenation

by Viviane Reding

Wall Street Journal
February 8, 2012

Twenty years ago, Europe's leaders met in a Dutch city tucked away near the borders with Germany and Belgium to sign the Maastricht Treaty. It represented the most significant leap in European integration: the creation of the single currency.

The decision to transfer monetary sovereignty to the European level resulted from seismic political events. The end of the Iron Curtain and Germany's reunification created the political will to bind Europe's nations together forever. The introduction of euro bank notes 10 years later crowned this process.

But before its ink was dry, the new treaty was criticized as incomplete. Maastricht provided for a single monetary policy but left economic, fiscal and social policies to national governments. The European Central Bank was put in charge of monetary policy, but the treaty didn't create a fiscal counterpart.

This asymmetric construction was deliberate. Many thought that it would allow for competition for the best national policies on taxation, social security or health insurance. Others regretted that Maastricht did not include a full-fledged political union, but they were confident that there would be spillover effects into other policy areas after common bank notes began circulating.

More