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Completing The Economic and Financial Integration Process: Some Crucial Steps Still To Make

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To its critics, the decision by the European founding fathers to begin any form of collaboration from the economic and financial domain is the existential flaw in the entire European integration process.

In reality, this was a very precise design choice: the generation of the founding fathers still remembered how futile political agreements were in the absence of shared economic interests. The memory of the Munich conference in 1938 was still vivid in their minds, when they decided that the first step of European cooperation had to be centred on the basic economic needs of post-war countries: coal and steel. The European Coal and Steel Community (the precursor to all subsequent European Communities) was formally established in 1951 by the Treaty of Paris, signed by Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany.

Fast forward a few decades, after the European Economic Community and, eventually, the European Union were created, the principle underlying any further integration process remained the same: founding any agreement on shared economic interests, because doing so will, eventually, lead to the political union that, for Europhiles, represents the ultimate goal of the process.

After the single currency was launched in 1999 and became common currency in January 2001, the design flaws of the project became apparent with the Global Financial Crisis of 2007-09 and, even more so, with the Greek/euro/sovereign crisis of 2010-2012. The lack of resolution and solidarity mechanism beyond the antiquate Growth and Stability Pact (GSP) meant the euro was on the verge of collapse in 2012, until Mario Draghi’s celebrated “whatever it takes” speech in London in July of that year. 

Since then, the euro-area (a large portion of the EU), has launched a series of communitarian and inter-governmental initiatives that have stabilised the monetary union (EMU) and re-launched the economic and financial integration process.

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