Europe could look for refund on euro

On Jan. 1, 11 European nations implemented the euro as their shared currency. Although the demise of national currencies will take place slowly over the next three years, one can safely assume the euro is here to stay.
The European Monetary Union makes perfect economic sense, but a democratic deficit within the EMU and its primary institution, the European Central Bank, could easily result in civil unrest across Western Europe.
The political and social implications of a united Europe have yet to be ascertained. As the EMU takes its first steps, the European media speculates about the possible problems of a federated, centralized Europe.
The current situation is reminiscent of 1995, when strikes spread across Europe as it took the first steps toward implementing the 1992 Maastricht Treaty. The treaty called for a converging of Europe’s economies, which required countries like France and Italy to cut social spending and benefits in order to meet the criteria. Only quick action by national governments and banks averted a complete rejection of the treaty. The ability of national governments to act according to the unique demands of their countries made the continuation of the EMU possible.
National banks are subject to the mandates of Europe’s central bank. This means national governments will be unable to react to problems that may result from the bank’s directives. If a country such as Spain cannot meet the requirements of the ECB — e.g. the reduction of the national deficit — then it has no choice but to take measures to correct the situation, including fiscal cuts to social welfare. Any other action could result in fines or sanctions imposed by the ECB under the power of the Maastricht Treaty.
What will stop another wave of protests or strikes if Spain takes drastic measures?
Members of federated systems necessarily cede a certain amount of self-determination and sovereignty in order to serve the greater, common good. Yet in the case of the EMU, bankers and economic experts are making the tough decisions. Economists have replaced politicians.
One can liken the European Central Bank in Europe to the role played by the International Monetary Fund in the developing world. Economics has replaced politics as the preeminent power. What is most disturbing about this trend is the lack of public support, or ratification of this development. Referendums put to the public concerning ratification of the Maastricht Treaty either passed narrowly or not at all.
Europe’s monetary union could face serious civil and public opposition if the citizens of Europe are confronted with the destruction of the welfare states they have fought so long to create.
As of now, the European public trusts its leaders. If the promised economic benefits — elimination of foreign exchange risks, lower prices and lower unemployment — are realized, the euro has a good chance of surviving. But if the leaders in Europe, most notably the men and women appointed to run the central bank, impose rigid regulations on sovereign governments, then a possible public backlash could prove devastating to the EMU and the well-laid plans of European economists.