The EU has responded to this wave of euroskepticism by asking for more powers to govern states' political and economic affairs. At a December summit in Brussels, 26 of the EU's 27 countries (with Britain left in splendid isolation) signed on to a fiscal pact that would cap state deficits and punish those that exceed them, give Brussels greater powers to tinker with national budgets, and potentially lead to harmonized tax rates across the bloc. There is some logic here. After all, the euro's current woes can be traced back to the decision taken at Maastricht 20 years ago to pursue a monetary union without a fiscal, economic, or political one. This meant that EU members agreed to common interest rates, inflation targets, and debt levels but were free to decide how much to tax their citizens, what welfare and pension payments to make, and what employment policies to pursue. Sooner or later the system's flaws were going to be exposed and the markets would react, as they have so brutally. Now the EU faces a grim choice: adopt piecemeal measures to prevent the financial contagion from spreading, or create a kind of United States of Europe with common fiscal and economic policies and a de facto federal government in Brussels.
Neither option is particularly attractive. The former will lead to the probable collapse of the single currency, the liquidation of many of Europe's top banks, and a prolonged recession in Europe and the rest of the world. The latter might save the euro but will further alienate the EU from the people it is meant to represent. And, of course, the bailout will cost taxpayers hundreds of billions of euros.
Supporters of the European Union have often compared the club to a shark: If it stops moving forward it will sink. The goal of an "ever closer union" among peoples and states is even written into the EU's founding treaty, as if it were a historical inevitability. For more than half a century, as the union has grown from six founding states to 27, its members have voluntarily handed more powers to Brussels, and the bloc has never stopped moving forward. The economic crisis could end up accelerating this process of integration, but at what cost to the EU's long-term legitimacy?
"As the European Union advances, it seems we are losing the European citizen somewhere along the way," Joe Borg, then an EU commissioner, said in 2005. If this was true seven years ago it is even more so today, as technocrats replace elected politicians to lead crisis-wracked Greece and Italy and teams of EU and IMF officials descend on Athens and Rome, Madrid and Lisbon, to cajole politicians into making painful cuts.
In the past, EU leaders rarely had to worry about the tedious business of courting public opinion. Not anymore. The prospect of enlarging the union any further rests in the hands of voters in Austria and France, both of which are bound by their constitutions to hold a referendum on the issue -- a stipulation that effectively scuppers Turkey's chances of joining the bloc, given the animosity toward Ankara in both countries. Changing the EU treaty to make eurozone rules stricter, meanwhile, could trigger a popular vote in Ireland, where voters initially rejected the EU's last two attempts to change its treaty.
Shortly before the launch of euro coins and notes in January 2002, Duisenberg, the European Central Bank president, mused, "The euro is much more than just a currency; it is a symbol of European integration in every sense of the word." He was right, but not in the way he might have hoped. A decade on, the plight of the embattled euro seems to encapsulate a broader breakdown of Europe's dreams of a united future. Rather than bringing the European Union closer to its citizens, the currency has widened the gap between rulers and ruled. Instead of ushering in a new era of prosperity, the euro has condemned millions of Europeans to decades of penury. And far from bringing together the peoples of Europe, it is on the verge of tearing them apart.