想象2007年，扩大的欧洲沐浴在繁荣之中

The Europe of 2007 is larger, more united and more prosperous than could have been expected at the beginning of 1997. Its territory extends not only to Central Europe but also to the Baltic states. Not only does it have a common currency but also a common fiscal policy which serves two objectives: to counter cyclical variations and to even out divergences among individual states. The Union acts with a single voice in foreign policy. It has a constitution which makes the European Commission responsible not to the Council of Ministers but to the European Parliament, and the Council of Ministers acts as the upper house of the European Parliament. The principle of subsidiarity prevails and legislation which impinges on national sovereignty must receive two-thirds’ support in both houses.

There is close political and military cooperation with the United States on the one hand and Russia on the other. The eastward expansion of NATO has been accomplished by a grand alliance between NATO and Russia. The Grand Alliance is part of a system of alliances which assures peace and stability in the world.

How did this miraculous state of affairs come about? It all started in 1997 when the people of Europe realized that the future of the European Union was in danger. There was too much emphasis on the common currency and not enough on the political integration of Europe. The people of Europe were feeling increasingly alienated because decisions were foisted on them by governments that seemed insensitive to their concerns.

The common currency was moving forward with the force of a steamroller, although the French public was preoccupied with the problem of unemployment and tended to blame the common currency for its persistence, and the German public was reluctant to see the stability of the Deutsche mark diluted by a European central bank which included the Mediterranean countries. Those countries, particularly Italy, had so much to gain from the common currency that they were determined to be included in the first round.

To make the introduction of the euro palatable to its voters, the German government had insisted on a very tough stability pact. Thoughtful people realized that without any leeway in either monetary or fiscal policy, unemployment could not be reduced. To stimulate employment, rigidities in the labor market would have to be removed and the very onerous taxes imposed on wages would have to be reduced. That would cause a temporary rise in the budget deficit which was not permitted under the stability pact. There was a danger that the Union would be sacrificed on the altar of the common currency. It was as if Keynes had never lived. If you recall, it was Keynes who warned against the adverse effects of England going back on the gold standard in 1926.

Against this background, some leading citizens of Europe initiated a public debate on the future. It encountered a remarkably strong response. It led to a Congress of Europe in May 1998, on the 50th anniversary of the first Congress. A Declaration of Interdependence was adopted which spelled out the political foundations of the European Union. The Declaration played a major role in the elections for the European Parliament in 1999, and bowing to public pressure, the governments of Europe yielded greater power to the European Parliament. I don’t remember whether this was accomplished by a treaty or by the Parliament converting itself into a Constitutional Assembly. But one way or another, the new constitutional structure that I described before emerged.

Fortunately, 1998 showed some economic pickup because of the reduction in interest rates which occurred in 1996, and so the introduction of the common currency went off without a hitch. In the year 2001 or 2002, I don’t remember which, renewed economic weakness led to the abandonment of the stability pact and it was replaced by a common fiscal policy which succeeded in stimulating the economy by reducing the taxation of wages. That is how we scraped by and reached the benign conditions of the year 2007.