DUBLIN ? Linked by a common currency but not a common economy, the crisis-battered euro-zone nations are facing a pivotal choice: Either forge more closely together or risk their currency union breaking apart. But are European voters ? some in nations divided by centuries of rivalries ? willing to take that leap toward closer integration?
The fiercely independent Irish are about to offer a window into the answer. Voters here go to the polls Thursday in a referendum on a region-wide fiscal treaty inked in January that would impose strict limits on budget deficits and debt. In effect, the treaty would see the European governments that ratify it surrender a measure of sovereignty over two of their most sacred economic rights ? how much they can borrow and how much they can spend ? to the bureaucrats in the region?s administrative capital of Brussels.
The referendum, in many ways, is shaping up as a litmus test for the will of Europeans to more deeply tie their economic fortunes together. As the region?s crisis deepens, European Commission President Jose Manuel Barroso underscored the urgency on Wednesday, heightening calls for radical rule changes that would begin to make the 17 member nations of the euro zone act more and more like the 50 U.S. states.
A fund drawn from all euro-zone members, he said, should to be directly used to rescue ailing banks throughout the region, shifting the burden away from national governments. In addition, he called for the adoption of a regional deposit-insurance program, similar to the FDIC in the United States, and the creation of a new regional banking supervisor. He reiterated calls for eurobonds ? or collective debt that could replace national bonds across the 17-nation euro zone, seeing the risk of wobbly nations, such as Greece, Ireland and Spain, offset by the might of the German taxpayer.
One of the biggest obstacles, however, is fiscally conservative Germany, the powerhouse of Europe that is reluctant to use its financial clout to back weaker euro-zone countries that have disastrous finances. Thus, Berlin has called the new fiscal treaty essential. By strictly limiting spending in profligate nations, the Germans contend that the pact will prevent a repeat of the credit-fueled decade that has brought the euro zone to the brink of breakup while allowing Berlin to consider bolder steps toward integration.
Many fear the kind of timetable the Germans are working on ? months on some measures, years on others ? will nevertheless not come fast enough to quell the current crisis.
At the same time, some Irish are asking whether enshrining austerity in law is really a bright idea, especially as France?s new president, Francios Hollande, is pressing for a pact that shifts the emphasis of Europe?s response from austerity to growth and with German Chancellor Angela Merkel facing tough opposition to treaty ratification in her own parliament. The Irish, in fact, are being asked to make that decision as waves of budget cuts aimed at meeting the terms of their $113�billion bailout from the European Union and International Monetary Fund have already plunged the country back into recession.
Source: http://feeds.washingtonpost.com/click.phdo?i=b9e7240be1fb49d425f0f7831da93af8
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