A main goal of the European Monetary Union is to promote economic and political unification throughout Europe. Two world wars fought in Europe, plus the Depression of the 1930s that was fueled by protectionist trade policies, made a compelling case to dismantle the political and economic borders of post-World War II Europe. The United States encouraged closer economic ties to promote European reconstruction in view of expanding Soviet communism. Supporters maintained that monetary union would foster European peace and also restore European geopolitical power, with a currency on par with the U.S. dollar.
As Europe proceeded toward the euro and monetary union, concerns about the lack of fiscal union to support it were swept aside. Some economists predicted that a monetary union without a political mechanism to supervise fiscal policy (rein in budget deficits) would eventually make the monetary union impossible to maintain. They also contended that a uniform monetary policy geared to the low inflation of Germany (the largest member) might result in an interest rate that was too low for smaller, high-inflation countries like Greece, leading to trade deficits fueled by easy credit. These economists were often ridiculed by the European media for their alarmist views.
When the eurozone was being formed, the government of Germany insisted that Italy, as the fourth-largest European economy, be a founding member even though it did not fulfill the condition of sound government finances. Once debt-ridden Italy was included, there was no argument for excluding high-spending countries such as Greece, Ireland, and Portugal, which became members of the eurozone. The eurozone consisted of the fiscally healthier countries such as Germany and the fiscally weak countries like Greece. As the global debt crisis emerged during the Great Recession of 2007-2009, it became increasingly apparent that although the eurozone has a single currency, the member countries are not identical.
Skeptics note that the euro was a bold venture that placed the cart before many horses. The basic problem is that the eurozone is not a single country. Initially 11, and now 19, sovereign countries signed up for a currency union without first homogenizing their budget policies, tax systems, and bank regulations-that is, they did not form an economic union as discussed at the beginning of this chapter. They did so without creating a central government strong enough to enact cross-border fiscal discipline or finance cross country transfers. Disunity within the eurozone mounted as some countries pursued sound fiscal policies while others pursued unsound policies. Fears have spread that the weak nations of the eurozone could default on their debt and might have to pull out of the eurozone.
To lessen such fears, the eurozone countries met in 2011 and pledged that each member would enact a constitutional rule to balance its budget and face penalties if its actual deficit exceeds 3 percent of its GDP. The fines could cost billions of euros. Critics maintain that there is no enforcement mechanism for this pledge, and it could easily be violated and watered down to be completely ineffective. At the writing of this text, the determination of the eurozone members to achieve fiscal integrity remains unclear.

What do you think? Do you think that the eurozone countries will ever achieve fiscal union?