How can the eurozone evolve into a federal body, and should it? www.starrfmonline.com
EU

If we assume it is something worth doing, how can it succeed and what needs to be done?

What will be needed is:

1. It will need a bicameral parliament - one being a House of Representatives and one being a state-based Senate.

The House of Representatives would be the same MEPs as those that sit in the European Parliament at present. This would thus need no additional cost to the public in terms of politicians.

The Senate is required to balance the needs of the small states against the needs of the big states. Each eurozone state would have 10 Senators which initially would be appointed by each member state but would eventually be elected by the public.

Note: as all but two EU member states [Denmark and the UK] are bound to adopting the euro, federating the eurozone area would be the launching pad to federating the EU as a whole over time.

2. A Central Bank that controls the economy of the entire eurozone, just like the Bank of England or the Deutsche Bundesbank in Germany; who's primary objective is to manage inflation, economic growth etc.

The current European Central Bank is constrained by its inflation/debt directives. The ECB of a federated eurozone will need to have a much broader objective, and that is to manage not only inflation across the member states of the eurozone, but also the overall eurozone debt, unemployment and economic growth. It will need the political ammunition to be a central bank and act like one for the benefit of all eurozone citizens.

As economic management of the state economies will be managed by the eurozone parliament and the ECB, the national banks' role would be reduced to basically implementing the ECB's policies at a state level. The question that will need to be addressed is - do we even need the national banks?

3. A central tax system which would be on top of the eurozone state tax systems; this does not mean taxes would be higher, however a re-adjustment of state taxes would need to be undertaken to compensate for the eurozone wide tax.

The tax collected centrally will need to be determined based on how much of a role the ECB will play within the eurozone and what role the national banks will have.

Can it be implemented?

It would depend on how it is sold to the public. The hard sell would need to include not only the advantages of a federated eurozone but also the consequences to the public. As this federating the eurozone will require a level of loss of national independence.

The question that one needs to ask though is - would the economic crisis in Greece, Portugal, Spain and Ireland actually have occurred if the eurozone was federated? If it can be shown that a federated eurozone would have resulted in the economic crisis in these countries either being of minimal impact or - in a best case scenario - never happened, it will be a positive to the public to support it.

What will work against it at present is the perceived German role in resolving the current economic crisis and how it will be perceived as a German hegemony occurring. The advantage is that this proposal is not a German one but rather a French one, and under the proposal I have put forward, could show that Germany' influence would be counterbalanced by that of the smaller states.

It's success will mean that the European Union can evolve further despite the current crisis. If it fails, then we can be doomed to the EU being a union of member states rather than a union of European people.

Whether it is achieved or not, the discussion that has arisen out of Hollande's proposal is something that needs to be undertaken by all sides.