The euro area is equipped with a series of partial powers, rather than a government. The economic challenges facing Europe during the crisis were significant, but they were repeatedly magnified by Europe’s inability to anticipate them, by its penchant for procrastination, its taste for fragile compromises and its propensity to reopen discussions after they had been settled. It would be wrong, however, to regard the executive deficit as a behavioral rather than an institutional problem. The Maastricht Treaty established a euro area that was not designed to cope with crises. Governance by rules and procedures can work fine in fair-weather conditions, but cannot be relied on in stormy weather. What is expected from policymakers during crises is an ability to go beyond the script and to exercise discretionary power. At first sight, it may seem that the solution would be for Europe to adopt the federal model and create a stronger center that is capable of taking initiatives and making decisions. However, in designing the response to the crisis and creating the EFSF and the ESM, the euro area did just the opposite by embracing the model of mutual assistance. This choice arose from legal constraints and a political objective, but suffers from severe shortcomings. In the long-run, the federal model would be the most fitting solution and the most consistent with the history of the European Union. However, for the foreseeable future, Europe seemed condemned to experiment with politically acceptable but systematically inferior solutions.
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