Professor Domenico Siniscalco, former Italian Finance Minister and Vice Chairman of Morgan Stanley
Professor Domenico Siniscalco, former Italian Finance Minister and Vice Chairman of Morgan Stanley

Seven years into the euro crisis, economic divergence within Europe and the Eurozone is increasing. Bailout fatigue reigns in the North, austerity fatigue in the South. As a consequence, we are coming to the point where some fundamental questions about Europe need to be answered.

Some people believe that the Eurozone has no future because its member states are too different and diverging. They see a break-up as the only solution. I disagree with that. Other states exist that have strongly divergent regions. Building Europe isn’t only a policy issue, it is mainly a governance issue. The problem is that the European construction is essentially weak and dominated by national governments. Hence it is tested by the market constantly.

We have created European institutions like the ECB and the banking union which are truly federal ones, but that is not enough. What we need is more of a cooperative approach between member states instead of the “horse trading” that we often see at summits. It would be so much better if national governments could agree to first maximize the collective benefits and then redistribute if and when necessary like in the US or within Germany.

The situation is hardly sustainable. Either we want less Europe. In that case, we should settle for being a big trading area. Or we want more Europe because of the many problems that can best be dealt with at a European level. At the same time, we need to strengthen subsidiarity in other areas.

Driving a crisis is not easy, reforming Europe is like changing parts of an airplane in mid-flight. It is an art, but it also requires luck, good will and a sense of European identity. Clearly, this isn’t going to happen overnight. But we need to persevere.

This statement is taken from a speech that Professor Domenico Siniscalco held at United Europe’s Young Professionals Seminar in Arosa in September 2014.

Domenico Siniscalco

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