Friday, April 27, 2012

Is the Collapse of the European Union a Realistic Scenario?

Martin Schulz, president of the European Parliament, said that the collapse of the European Union is a realistic scenario.  As president of the parliament, he is certainly an advocate for greater centralization of power in the EU.  For the average European, I believe, the goal is to have the gains from an economic union but they do not want a political union.  As I indicated in a recent post, I think the push for the single currency fifteen years ago was based more on political than economic goals.

Schulz attributed the danger to rising xenophobia and nationalism in the member nations.  But the pressures caused by the sovereign debt problems in Greece and Spain are not the result of xenophoba--there are more the result that Greece has no business in a monetary union with Germany.  Either Greece needs to pull out of the euro or increased political coordination is needed. That is, the EU becomes more like a United States of Europe with more spreading the wealth across borders.

Another point made by Schulz involves the mobility of people across borders.  France and Germany have suggested alterations to the Schengen treaty so a country can reimpose border controls for a longer period of time without EU approval.  They say they fear illegal immigration as countries like Greece have a harder time controlling illegal entry into their country. If someone enters Greece illegally, they can then without trouble travel to Germany. This obviously is similar to the US where if someone gets into Texas they  can then travel to Michigan without facing border guards.  To the extent that illegal aliens is the concern, Germany and France may have a point. On the other hand, perhaps they really want to keep unemployed in Spain from coming to France looking for work.

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