Cumulative Regional Decline, Institutional Inadequacy and the "Democratic Deficit": Is European Monetary Union Economically and Politically Sustainable?

This paper will examine the economic case for EMU. It will contrast the economic benefits of EMU with the dramatically important sacrafices which Member States have made by signing the Maastricht Treaty. Unless the true objective of EMU is something quite different to what we are led to believe, it is astonishing that EMU has been able to progress so far given the weakness of the economic case in its favour. It will discuss the traditional role of government in running its own affairs and will demonstrate the implications of EMU in severly restricting policy choice. The paper will suggest that without the parallel development of other European insititutions, the current design for EMU has the potential to beome disordered and break down. For EMU to function in a way that genuinely benefits the people of Europe, movement towards an overt political union, however dressed up and amorphously defined, will inevitably be required. The study will discuss the political benefits of closer European union and will assess different national motivations for closer European political integration. It will discuss whether monetary union is the first step of a policy package towards full social and political union. It will suggest that the biggest argument in support of EMU is the combined will of Europe's people and the existence of a genuin 'European spirit'. This is not denigrate the noble quest for Monetary Union but to highlight the potential dangers of attempting to achieve Political Union by Monetary Union. An inadequate and ill-considered EMU design has the potential to threaten the long-term sustainability of the broader European project.