Mario Draghi, president of the European Central Bank, warned a committee of the E.U.'s parliament at the end of May 2012 that the structure undergirding the euro in the E.U. had become "unsustainable." He criticized political officials for having kicked the can down the road by enacting half-measures or else delaying decisions, thus making the debt crisis even worse than it otherwise would have been. "The next step is for our leaders to clarify what is the vision for a certain number of years from now." Similarly, Olli Rehm, vice president of the E.U. Commission (the E.U.'s executive branch), said that ways must be found to avoid a disintegration of the common currency.
Such advice may be easier said than done. Even though vision and policy proposals are staples of leadership, the lack of the single executive at the E.U. level means that the competing ideological visions of state leaders who are active at the federal level via the European Council can result in no single vision being adopted. For example, David Cameron told his state's main legislative chamber that the E.U. is just one of the networks to which Britain belongs. That view of the E.U. is different from those of leaders from other states who view the E.U. as a federal union of semi-sovereign states. It is difficult to hold a vote on whether the E.U. is to be a network. It is much easier to vote on specific policy proposals. Fortunately, Draghi included some of those in his remarks at the parliament.
Besides pointing to the need for an agreed-upon vision for the E.U. that is consistent with a viable common currency being used even in debt-distressed states, Draghi urged the E.U. to establish a deposit insurance fund, presumably like the FDIC in the U.S., as well as to regulate big banks at the federal rather than state level. "Greater centralization of supervision is essential," he said. It may be essential, but Draghi was ignoring the conflict of interest facing state leaders in enacting such policy at the E.U. level. Essentially, the central banker was urging state leaders to give up power. The European Council, which represents the state governments via their executives or heads, had at the time more power than the "lower chamber," the E.U.'s Parliament, which represents E.U. citizens. This bicameral legislative structure, by the way, is what distinguishes modern federalism from "confederalism," only the latter retaining sovereignty in the states (e.g., The Articles of Confederation of the U.S., 1781-1789).
Therefore, combining Draghi's call for a long-term vision and more centralized regulation on banks, we can extrapolate a need for a more expansive vision that situates the European Council amid the other E.U. institutions as well as the role of the veto held by each government represented in the Council. That is, the vision must be constitutionalist in substance even if not in name. Otherwise, the E.U. will continue to be held back by the conflict of interest that is in the union's very design. Draghi did not go far enough in what he was suggesting, and thus his message can be reckoned as self-defeating at least in that it would doubtlessly face a strong headwind.
Ideologically-based visions being what they are (i.e., pretty enduring, or stubborn), the fact that very different visions of the E.U. have been voiced by state leaders serving on the European Council suggests that either a compromise will have to be reached (such a middle way may not be sufficient to support the euro, however) or two main visions can both be acted on in a "multi-track" approach. Of the latter approach, the "ever closer union" track must not be held back by state leaders favoring the "network" vision. Even as the state leaders insisting on the E.U. as a network meet to perfect that system for themselves, the leaders of other states who are willing to cede more state sovereignty to integrate more fully at the E.U. level would be advised to meet together (without the "network" state leaders) on a design that goes beyond transferring particular regulations incrementally to the federal level.
For instance, the state veto may not be sustainable as a devise, and the balance of power between the European Council and the Parliament might need to shift away from the states (while not depriving them of a veto as a council). Furthermore, something less than unanimity would be advisable for ratifying amendments. In this context, which would not apply to the states in the E.U. network only, it makes sense to talk about an FDIC-like fund and federal banking regulation. Otherwise, I suspect that the E.U. will continue to be "made" incrementally, policy by policy. I take Draghi's main point to be that such an approach was no longer enough for the euro to be sustained.
Jack Ewing, "Central Banker Sees Structure of Euro Zone as 'Unsustainable'," The New York Times, May 31, 2012.