European integration progresses by successive crises. Is the euro not the child of the crisis of the European exchange rate mechanism, early 1990s The crisis of 2009-2010 will not be exception: the euro area may well out with better integrated macroeconomic policies and a permanent mechanism for resolution of the crisis, sealing a form of solidarity between Member States.
On 28-29 October European Council endorsed the recommendations of the Working Group Van Rompuy on economic governance in the euro area, which hold in five points: the strengthening of the sanctions for budgetary indiscipline; the expansion of monitoring all economic policies; better coordination of fiscal policies in a "European semester" before voting budgets by national parliaments; a permanent mechanism for resolution of crises and a strengthening of institutions and arrangements in charge of the accounts, make predictions and decide economic policy.
Thus, it is towards more integration, and not the explosion predicted by some, that move the European partners, with the key a certain abandonment of sovereignty, since economic policies will be coordinated at Community level up their vote at the national level, the Commission will carry out audit missions in situ in such State unruly member, and because any financial assistance will be subject to strict conditions in terms of policy adjustmentsas is the case today in Greece.
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The Council, fired by the Franco-German couple, decided to go much further than the suggestions of the European Commission, with two particularly notable propositions which, because they affect the rule of "bailout" mutual Member States require a change in the Treaty: the sustainability of the European financial stabilization fund (EFSF), and a procedure for debt restructuring involving the private sector. The sustainability of the Fund is an alternative to European bond issue: it is to create an institution that can issue debt, with the guarantee of all the countries involved. The "quality" or marking of this debt will depend on the quality of the participating States and de facto, it is a debt "euro area", sitting on the collective quality of the fiscal policies of the States of the zone. The Fund also embodies the possibility that give the States of the eurozone to interfere in the finances of their partners. A country using the EFSF should undergo a stabilization program decided in agreement with its partners in the euro area.
Similarly, the possible restructuring of sovereign debt of a Member State involves both a new solidarity (since the EFSF, so the European partners, do not recover the entirety of their claims) and a temporary loss of sovereignty - only one country under "program" EFSF that can de facto be used, for understandable reasons of credibility, particularly to maintain his access to the private sector.
The issue now is whether any modifications to the Treaty will be sufficiently limited for a quick ratification procedure, i.e. before expiry of the current stabilization fund, mid-2013. Other changes envisaged in European governance require no modification of the Treaty and will therefore see the day soon: early 2011 for the European semester and likely the next year to the other provisions, after a vote of the European Parliament in summer 2011.
Among these provisions, the establishment of independent budget committees at the level of the Member States, that we had called our wishes in these columns, will be encouraged but no doubt not made mandatory. Yet, Member States would be well inspired to think about devices promoting debates at the national level so that Brussels does not become once more the scapegoat for the upcoming adjustment plans.