In his keynote annual address to the European Parliament on Wednesday, the President of the European Commission Jean-Claude Juncker called for the enlargement of the Eurozone to encompass the union as a whole.
“If we want the euro to unite rather than divide our continent, then it should be more than the currency of a select group of countries. The euro is meant to be the single currency of the European Union as a whole,” Juncker said.
He also spelled out the promotion of a social rights union, pairing social with individual rights.
Financial integration along with socioeconomic integration
Citing the Maastricht Treaty (1991), President Juncker recalled that only two countries – Denmark and the UK – have the right to opt out from the Single Currency.
To encourage the speedy adoption of the Euro, President Juncker proposed a “Euro-accession Instrument” that will offer technical and financial assistance.
President Juncker said that the adoption of a single currency is a prerequisite for the promotion of financial integration, including the Banking Union.
Hinting to the most politically sensitive issue of debt, the President of the European Commission said that financial integration requires two parallel processes of “risk-reduction and risk-sharing.”
In a political statement that echoes the negotiation of the Franco-German axis, President Juncker spoke of a parallel political path of integration of both financial and – for the first time – socioeconomic integration.
“To get access to a common deposit insurance scheme you first need to do your homework. If we want to avoid social fragmentation and social dumping in Europe, then Member States should agree on the European Pillar of Social Rights as soon as possible and at the latest at the Gothenburg summit in November. National social systems will still remain diverse and separate for a long time. But at the very least, we should work for a European Social Standards Union in which we have a common understanding of what is socially fair.”
Besides Denmark and the UK, there are five EU member states that have not joined the Single Currency: Sweden, Bulgaria, Croatia, Czech Republic, Hungary, Poland, and Romania.
Romania, Bulgaria, and Croatia have said they are willing and working towards the adoption of the Single Currency. However, monetary integration is less popular in the Czech Republic, Hungary, Poland, and Sweden.
The opposition of the Central European states is not limited to the monetary union. More broadly, these are states that do not favour political integration and have clashed with the European Commission on a number of issues, including migration.
Skepticism over the Euro in Scandinavia has surged by comparing the Danish and Swedish experience to the Finnish. While Denmark and Sweden were able to recover relatively swiftly during the financial crisis by pursuing quantitative easing and external devaluation, Finland was forced into an unprecedented internal devaluation process with the economy unable to regain competitiveness.
The pairing of social and financial integration by the President of the European Commission appears to offer a new frame of negotiation, which remains a hard sell given the surge of nationalist parties across the Nordic countries. Perhaps as significantly, the idea of debt mutualization and guaranteed social benchmarks across Europe is likely to meet resistance in Berlin.