Can you imagine a euroless union?

Can you imagine a euroless union?

It has finally been understood that the German economy, the leader of the eurozone, has come to share the same fate as all the rest of the union’s economies. The gross domestic product fell by 0.5 percent in the fourth quarter of 2012. The latest information about the overall eurozone industrial output indicates that there was a 0.3 percent fall in November last year. Unemployment also rose to a record level during the same month.

In addition to these economic problems, David Cameron, the prime minister of the United Kingdom, the country which chose to stay out of the eurozone years ago and has continued to postpone the date for a referendum on membership in the monetary union, promised another and more important referendum – contingent on his party winning the next elections – on staying in the union or abandoning it entirely.

This naturally made leaders of the eurozone uneasy. For some opinion makers, Cameron’s main aim was to try to form a suitable atmosphere for abandoning full membership, a widespread rumor that has been spreading around European political circles. Some have insisted for years that the U.K.’s departure would be the end of the European Union.

Are all these rumors true and realistic? To answer this question, it is better to remember the past. As everybody knows, the ultimate goal of the Common Market when it was established in 1957 was to achieve a political union through economic cooperation between the member countries. There were many reasons for that desire, such as the wish to convert Europe from a historical battleground to a land of peace, and to create a third world power against the dominance of the United States and the Soviet Union in the wake of World War II.

The “economic cooperation” part of the project proved to be feasible to some extent. However, when the leaders of the original members attempted to create a Euronation by “enlargement” and, moreover, to impose a common currency on that new “nation,” the project began to encounter serious difficulties. The historical reality, geostrategic positions, traditions, culture and human factors of the old and new members were too different from each other to create a “Euronation.” The different ideologies of the governments in the different countries meant that the monetary and fiscal policies implemented were quite divergent from each other, ensuring that the imposition of a common currency was not feasible. The recent crisis has proven this fact.

Beyond expectations, however, the euro became a second international currency within a very short period of time. There are so many reasons for this success story. First of all, the pioneers of the project were the politicians of the leading economies in continental Europe. Then, the new members of the union, which successfully passed the first tests of their economic performance, followed the original members in abandoning their national currencies, accepting the euro to share in the future prosperity that the new money was expected to create.

However, when the recent crisis made the hidden deficit and debt problems of some member countries clear, faith in the success of the euro began to disappear, even though its “guilt” in those newly discovered problems was negligible. But since blaming concepts is easier than condemning politicians, the euro became the main culprit for Europe’s problems, leading some to ultimately begin discussing a “euroless European Union,” without realizing that it was too late to abandon the common currency. It means that there will be no union without the euro. It would be disastrous not only for the members which have economic problems but also for the leading economies, both economically and politically.

The union must continue to follow its normal path with the euro but must also find the will to impose the rules which are necessary for the full success of a monetary union: a workable banking union and a fiscal union. Realizing these conditions is, of course, very difficult politically. However, without imposing the necessary rules, there will be no real common currency and, maybe, no union at all, as predicted by the pessimists.