The Euro-debt crisis: what future for the euro zone? Greece vs Germany and the reform of the EMU

INTRODUCTION Preamble on the euro-debt crisis The project of creating a common currency has always been a European dream since the 1950s, as one of the last steps of the ideal United States of Europe (USE) – and even at present the European Union (EU) seems so far from a real possibility of being transformed into the USE. With the end of the Bretton Woods' system some experiments, such as the currency snake and the European Currency Unit (ECU), prepared the course of the euro 1 , finally introduced with the Maastricht Treaty (July 1992), considered by many as a “compromise between Germany and France” (Mamadouh, Van Der Wusten, 2010, p. 111). In the negotiations that gave birth to the euro, both France and Germany seemed to prevail if compared to the other countries of the club. In particular, the reunified Germany of Helmut Kohl did all its best to win the dispute with the French and was soon identified as the main leader of the EMU. Not only the new European Central Bank (ECB) was placed in Frankfurt, but also it was “modeled after German Central Bank preference” (Mamadouh, Van Der Wusten, 2010, p. 111), by recalling the principles of Central Bank Independence (CBI) and Price Stability, with a typical German inflation control policy and with “the interdiction of monetizing public debt” (Proissl, 2010, p. 1). It is fundamental to remember that despite the fact that the French had initially tried to introduce the “gouvernment économique” clause in the treaty (see Art. 99), only a general framework of economic coordination was provided. While monetary policy was designed as federal, fiscal policies remained in the hands of nation states, in the assumption that “fiscal policies should not jeopardize monetary policy goals” (Maior, 2010, p. 5); the German model was finally completed by the “no bailout clause” (see Article 103, section 1: “The Community shall not be liable for or assume the commitments of central 1 The euro was introduced on January 1,1999, as an accounting currency, that replaced the old ECU. In a second moment, starting from January 1, 2002, the euro started to circulate. At present seventeen EU member states have adopted the euro. They are: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. 7