The financial crisis that hit global economy since the late summer of 2007 is the worst in post-war economic history. It affected the European Union showing the need for real economic governance in Europe through the convergence of fiscal policies. Up to now, there is economic administration only in the monetary section. The need for economic governance has two aspects: firstly, it is a political choice for the confrontation of the economic problem, and secondly, it is an economic demand for the effective use of economic assets (through coherence policies).
Today the fiscal policy remains under the appositeness of EU member states, but comes under common rules which are enacted by the Treaty of the EU and the Stability and Growth Pact which promotes the fiscal discipline of the member states and a system of mutual observance so that the public deficit to the Gross Domestic Product (GDP) does not extravagate the limit of 3%.
Today the basic economic institutions responsible in macroeconomic level for the economic governance in the EU are the ECOFIN Council and the European Central Bank. The Lisbon Treaty enacts the President of the EUROGROUP (this means reinforcement of credibility and transparency) and the European Central Bank (whose role is stability of prices in the Euro zone).
The ECOFIN Council is constituted by the Ministers of Economy and votes for the general economic directions. The EUROGROUP Council is constituted by the Minister of Economy of the Eurozone.
Is Lisbon Treaty enough for integrated economic governance in the EU? The answer is no. Lisbon Treaty is only the beginning. The integrated economic governance must concern all member states, not only the Eurozone. So a prerequisite is that all the member states must adopt Euro. But this will be done only when they are able to have strong economies.
Economic governance and European political integration are issues interrelated. Economic union is a necessary prerequisite for the future political union of the EU. European integration implies European Federation.
The states would not leave easily their fiscal policy in a supranational level. It is a sensitive political section for national governments. Nevertheless, they should try. A coordination of the fiscal policy is necessary, because (a) this will favor the societies and (b) it will reduce the economic gap and the asymmetry between member states. EU must act in order to stop objections. It must be understood that the nation state does not die, but it is reformed. European integration must go on. Other issues needed to be addressed are:
1) EU needs an adequate number of resources. Now, the European budget represents only the 1% of the European GDP. This must be increased up to a percentage (5%) able to support economic development and civil protection of the member states.
2) EU needs a direct European tax in order to be able to promote its policies.
3) EU needs redistribution institutions in order to promote cohesion between the regions of the member states.
4) The members of the ECOFIN Council must have the power to act like the Ministers of Economy in their countries.
Lisbon Treaty is not a perfect text. It is a compromise between the 27 member states. Time will pass until the application of the Lisbon Treaty. The next step, when the conditions materialize, must be a new Treaty, and maybe a Constitutional Treaty.
EU started as an economic community. Thus, economic union, financial integration and economic integration are the next step. And this must be understood by all member states. The collapse of the European construction is in no one’s interest. We need positive integration based on trust and on the idea of constructing a better future that will reinforce the EU, not only in the internal level, but also in the global level. Only then will EU achieve its goal: to be the most dynamic and competitive economy in the world.