PREPARING FOR A VAST CHURNING DEBATE ABOUT EUROPE'S FUTURE

The Euro Zone has revealed the reform need of Europe and there is a need for a radical change. The present crisis will shape Europe again. The Euro crisis points to an important break in terms of the building of Europe with unstable structure and to a new construction process. The main problem lies in the economical integration/political paradox which is a structural problem resulting from the euro zone structure rather than the irresponsible policies of the member states.

As the basis of European unification is not supported by an economical deepening simultaneously with structural transformation and enough political will, the crisis shows its affects deeply.

The toughest challenge in politics right now is resolving the tension between the best long term policy and the best short term politics. Nowhere is this tension clearer than in the debate over Europe. The reasons for this resurgent hostility and scepticism are not hard to fathom. Europe is in crisis. The Euro's design flaw- an economic union motivated by politics but not expressed in economics has become manifest. The foundation of the pro Europe case was partly the promise of ever upward prosperity. At present that promise is severely in question.

What the Eurozone crisis has done is to expose the need for Europe to reform. But it hasn't created it. It has accelerated this need, but the need was there anyway. Changes to the labour market, pensions, welfare and the way the state operates are all necessary for reasons of demography, technology and external competition. The truth is that much of the criticism levelled at Europe has been justified and is shown to be justified now. So the public attitudes to Europe are explicable and understandable. The row about national budgets adds to the sense of European malaise.

The real issue is what type of EU should be. There is no doubt that Europe needs fundamental, far reaching reforms. It should be pointed out that some reforms have been undertaken. Spain's labour costs have declined substantially since the crisis began. Italy has grasped crucially important reforms in areas like pensions. Greece has cut spending by a bigger amount proportionally than any country in Europe since the War. But other reforms especially in the arena of political reform will be hotly contested e.g. enhanced fiscal cooperation between the Eurozone members, banking union etc.).

Thus over the next 2 or 3 years there is bound to be a vast churning debate about Europe's future.

There are problems:

• Many member states are fighting an existing battle to survive;
• France and Germany are not sparking in synch;
• There are differences between North and South;
• There are differences between large and small member states;
• There are differences between those who favour a more conservative fiscal approach and those who favour a more lax one;
• There are differences on a range of topics from defence through to labour market reform.

When it comes to the future shape of Europe- economically, socially and politically, there is no pre-destined consensus. There is a tumult of debate, discussion and dissension. So the concept of a balance between integration and the nation-state is widely shared.

An approach by Europe's leaders that focuses on clear outcomes in specific areas is what most people in Europe would, along with changes to the Eurozone support. This agenda would be about: completion of the single market to create jobs; innovation; competitiveness; common defence policy in an era where global ambitions aren't satisfied by national budgets; energy and the environment where the gains, financial and otherwise, of cooperation could be enormous; in the fight against illegal immigration and organised crime; in art and culture and higher education.

It is our view that the current turmoil in Europe will produce a new settlement probably as any since the creation of the EU 66 years ago.

If issues of effective governance at EU level are not addressed as ones of absolute priority, the crisis shock might go the other way: increasingly questioning the value of the EU and having member states reclaim their sovereignty or even leave the EU.