Prince Tancredi, a character in The Leopard, a famous novel set in 19th century Sicily, reckoned that "if we want things to stay as they are, things will have to change". In the case of Greece’s financial troubles, a lot of things have changed since they broke into public view in 2010; and yet the problems seem to be always the same. But if Athens still cannot repay its debts, neither can the eurozone of the European Union as a whole find any resolution, as bailout follows bailout. The euro’s future itself remains uncertain, to say the very least. 19th-century Sicily was enduring a long, slow, and in the end unstoppable decline; is Europe on the same course?
Like it or not, Europe’s key problem is that a currency union without a political union is not sustainable. There have been and indeed there are many cases of monetary unions, but they have survived only when they included small countries (e.g. Switzerland and Liechtenstein) or when one of them was a colonial (or formerly colonial) metropole (e.g. France and the franc zone in western and central Africa). Optimal currency areas function well only if there is a fiscal union and the possibility of transfers from wealthier to poorer countries. This is not the case for the eurozone. To paraphrase a famous sentence from the American revolution, we could say "no euro without representation" - that is, no euro is possible without a (democratic) political union. Why then have we reached a stage in which the destiny of eurozone citizens is mainly decided by unelected bodies and technocratic authorities?
A flawed model
