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An Open Eurozone Is a Weakened Eurozone

There are methods which could easily be used to reform the eurozone with tighter controls. However, demoting the euro from a requirement to some sort of enhanced cooperation or its like will have its problems, largely because of the agreed ethics of such processes within the greater Union.
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The Merkel-Sarkozy euro strategy is taking shape, and will very likely include an attempt at treaty change regarding euro (but not EU) exit for existing eurozone members, and deeper integration of the eurozone. That additional treaty powers will be sought at the Brussels summit on Dec. 9 is without question. But comprehensive treaty changes allowing deeper integration of the eurozone is completely unnecessary, as any needed authority to do so already exists, albeit in a way that may be unacceptable to the French-German drivers of this process.

The euro project occupies a different space from all other treaty arrangements, in that under existing treaties all member states are obligated to join (save Denmark and the UK, which can opt-in if they want) once they fulfil the convergence criteria for subsequent euro members.

This obligation propped up the notion that the euro was the currency of the Union forever, which seems to now be abandoned by the new option of getting out if you are in the euro but don't want to be anymore.

With the seeming demise of mandatory euro membership, monetary policy within the euro is just part of a cooperative Union subset of members, and need not be revered as anything more than other cooperative Union enterprises, like the subset of countries that participate in EU patents. The euro is more important, but importance of the subject matter does not confer special status under the treaties.

Member states of the European Union can band together and more deeply integrate under several processes, "enhanced cooperation" (TEU (Maastricht) Article 20; TFEU (Lisbon) Articles 326 through 334), its cousin "permanent structured cooperation" as governs the European Security and Defence Policy (Lisbon Protocol on Permanent Structured Cooperation in Defence Article 2), and its newer intergovernmental (member-state cooperation level) variant "open method of coordination" which has been applied to several core member state areas of legislation like employment strategy, asylum and education. The latter is generally considered a reaction to greater EU centralization, and the major organs of the Union take a less formal role, making it an unlikely choice.

Any one or more of these methods could easily be used to reform the eurozone with tighter controls and deeper economic union, and with a minimum of institutional disruption. However, demoting the euro from a requirement to some sort of enhanced cooperation or its like will have its problems, largely because of the agreed ethics of such processes within the greater Union.

The treaties mandate open availability of membership and equal treatment for such projects. Enhanced cooperation, for example, "shall be open to all Member States, subject to compliance with any conditions" and shall "promote participation by as many Member States as possible." (TFEU Article 328(1)) This method as to the more deeply integrated euro would state the requirements for membership, and those requirements would be the same should other member states want to join later. Those standards need to be the same for all, and could easily include agreement to the kind of tough self-executing sanctions for violating their promises Merkel wants and Sarkozy fears.

This approach might also force the hand of stragglers as to the euro to reconsider membership like Denmark, which used to have a referendum planned on the subject for this year, and Sweden, which is in the convergence process. A more deeply integrated euro, with evenly applied and real punishment for violators might be very attractive for those economies already effectively converged with the eurozone when the current crisis passes.

What likely makes an enhanced cooperation arrangement unappealing to the euro powers is the inability to grandfather existing members into whatever standards there will be for membership from the start. France and Italy may not be able to meet any acceptable economic standards for membership, as other countries with the same debt or inflation levels would be entitled to join, particularly if the entreaty to include as many states as possible is followed and not dismissed as mere hortatory surplusage.

Consequently, expect the eurozone next month to propose special treatment for themselves outside the typical methods of deeper interstate cooperation in the Union. The eurozone may get the ability to discriminate and exclude in favour of existing membership, but that will only enhance the feeling among the outs that "more Europe" within the more deeply integrated eurozone will mean "less fairness" to all, hardly a formula for a larger eurozone or a more durable Union.

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