Insight: Conflicting visions at core of euro zone crisis

Tue Dec 6, 2011 2:23pm EST
 
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By Paul Taylor

PARIS (Reuters) - Same bed, different dreams.

Since the inception of the euro, France and Germany have pursued divergent visions of European economic and monetary union. In two decades, the French have become a little more German, the Germans a little more French. But the gulf remains.

With the fate of the 17-nation single currency at stake at a summit this week, 20 years almost to the day since the Maastricht summit at which European leaders agreed to merge their monies, the same battles are still being fought out.

Between sovereignty and federalism; between "stability" and growth; between more solidarity and stricter discipline; between a directorate of big states and a more democratic organization for the continent; and between a tightly-knit "core Europe" and a broader but looser union.

The outcome of Friday's 27-nation European Union summit may determine the course of the world's largest trading bloc.

One road leads to a core group of euro zone states forging ahead with closer integration; another to a continuation of the current, multispeed Europe limping along at the pace of the slowest in the convoy; and a third toward a potential breakup of the currency and disintegration of the Union.

Compromise proposals outlined by Chancellor Angela Merkel and President Nicolas Sarkozy on Monday to anchor stricter budget discipline in the EU treaty owed more to Germany's drive for fiscal virtue than to France's push for more "solidarity".

The issues that divided Paris and Berlin were all too familiar - whether to give supranational EU institutions the power to overrule national budgets and punish deficit offenders; whether to mutualize European debts; whether to let the European Central Bank act as a lender of last resort to states and banks.   Continued...