The eurozone still faces two major fundamental problems.
Its component parts diverge economically and socially, and divergence is increasing.
This allows parts of the system to automatically benefit from the rules of the game, others to lose out.
Secondly, the only available mechanism to repair imbalances is internal devaluation.
It creates huge social hardship which, unfairly distributed, undermines the legitimacy of emu.
As in the Five Presidents’ Report, the Commission paper lists the tools that could, if properly used, help to counteract these two major flaws.
However experience has shown that tools lined up to address problems of European integration, unless properly structured through political agreement, correct symptoms while leaving underlying problems to fester.
This has been the case with the application of the two pack, six pack process.
So we have budgetary balances while public investment remains in decline.
Any new structural change in the eurozone’s structure would need a prior political agreement between eurozone members regarding how such change would operate.
Leaving it to be guided by (free) market forces, or making it subservient to the dogma that there can be no transfer union, would simply again give greater impetus to divergences, while allowing social unfairness resulting from internal devaluation to grow.