The crisis has triggered a very necessary debate about where we stand in Europe. One thing is clear though: the way out of the crisis is by consolidating our Union into a stronger, ever closer and more perfect European Union.
We should realise that this crisis is firstly a crisis of confidence.
Just look for a moment to the other side of the Atlantic: in May 2012 the debt mountain in the United States was $15.8 trillion and 101 per cent of annual GDP (while the eurozone average is at 91 per cent). In 2012, the US will run an annual deficit of $1.1 trillion, or seven per cent of GDP (while the eurozone average is at three per cent).
These figures show that the US is clearly on an unsustainable fiscal trajectory. It is not me who says it. It is the chairman of the US Federal Reserve, Ben Bernanke.
And, yet, no one calls in question the single market of the US or the viability of the dollar.
One of the reasons for this fact is that our American partners have grown more than 200 years ago from a loose union of states into a fiscal and a political union.
The foundations for the federal political union of the US were set in 1790. After the War of Independence, many of the US states were heavily indebted.
This led three politicians – Hamilton, Jefferson and Madison – to agree over dinner on the need to mutualise, as a one-off measure, the states’ debt and to issue fresh bonds backed by the US Treasury.
To this day, these bonds back the dollar, the US banking system and the global strength of the US economy. Every citizen can see this when s/he enters a US bank.
Because, under US law, insured institutions are required to place signs at their place of business stating that “deposits are backed by the full faith and credit of the United States government”.
This federal guarantee is why US citizens trust that their deposits are safe, also in times of crisis.
In the years to come, Europe could choose a similar approach. European leaders are preparing the blueprint for it.
This should include, among others, a single European banking supervisory authority and a European deposit guarantee scheme.
The most efficient way to do this would be to transfer the competence for the supervision of all systemically relevant banks to the European Central Bank. This can be done on the basis of existing treaties.
Such a banking union should be backed by the full faith and credit given jointly by the euro area governments and, one day, by a European Finance Ministry. In the medium term, a banking union can only work if complemented by a full fiscal and political union.
Our destination in the coming years is clear: if we want to preserve and strengthen Europe’s position in the world, we need to turn our economic and monetary union into a strong European political federation with a monetary, fiscal and banking union, covering at least the eurozone, while being open to all EU member states that wish to join.
The answer to the crisis is therefore more Europe.
Of course, changes will not happen overnight in the same way as Rome was not built in a day. However, we now need a credible road map for turning this vision into reality by 2020.
This week’s European Council may well become the European version of the Alexander Hamilton dinner of 1790. European Commission president José Manuel Barroso has tabled ambitious proposals, and I am confident they will find many positive responses, including in the European Parliament, which is the democratically-elected legislature of the EU.
However, achieving now a quantum leap in European integration requires from all heads of state and of government to look beyond short-term interests and to see the bigger picture.
They will have to understand that, in today’s globalised world, sharing and federalising sovereignty does not lead to a loss in democratic power but to the only way of maintaining democratic power in view of ever-growing global challenges, starting from the current financial and debt crisis to climate change.
Time has come for European leaders to show that the euro and the European Union – like diamonds – are forever. And that they will not only weather the storm but grow stronger.
The time has come to build a European Federation.