Credit is the new coal

Jean Monnet, the founding father of European integration, had a method: set aside abstract discussions on power, sovereignty and identities, and concentrate your energies on finding practical solutions to the underlying problems that block advances in cooperation. Against the federalists, who thought (and think) that peace and reconciliation among Europeans would be possible only in a United States of Europe, Monnet was convinced that integration had to begin with the economy, not politics. The advantages of his method were many: it was an incremental process, built of small steps from the bottom up, and could be managed by a small elite.

For Monnet, most problems had clear technical solutions, which people were loath to see because they thought in national terms. His copious number-crunching inventories earned him fame in both world wars, when he was a key organizer of the Allied efforts. In both conflicts, he made the powers see that sharing their economic resources would not only win the war, but would cost less than not sharing. Thanks to Monnet, the Allies survived the economic asphyxia caused by the German submarine campaign in the First World War, and industrially surpassed Germany in WWII.

After the war, Monnet sought a solution to the principal problem that pitted France against Germany: access to the production of coal and steel in the Ruhr basin, which historically had sustained the rearmament of the Wehrmacht. To this end, Monnet proposed an institution that would ensure free and equal access to these resources. The Schuman Declaration of May 9, 1950, which we now celebrate as Europe Day, was no more than the public presentation of Monnet's plan.

What would Monnet do if he came back today? Many people think that his method is precisely what is now in crisis: that economic integration is exhausted, that we have come up against a double wall of sovereignties and identities, and that without far-reaching political changes we cannot advance. We cannot, they say, go on sneaking integration through the back door, with technical measures adopted in disregard of the citizen. The salvation of the euro calls for political union, involving changes in the existing treaties and the national constitutions, legitimized by referenda. This, in short, is the argument with which the Germans defend their reluctance in setting up the two great pillars that would enable us to climb out of the crisis: first, a banking union, which would alleviate the problem of access to private credit; and second, eurobonds, or any similar mechanism to mutualize member states' public debts.

What would Monnet do if he came back today? Many people think that his method is precisely what is now in crisis

But if Jean Monnet returned, he would surely think that Europe is exactly where it was in 1950: gripped, divided and on the point of falling apart due to its inability to resolve the problem of access to an essential economic resource: credit. Credit, public and private, is now playing exactly the same role that coal played then. Today's economies do not depend on coal and steel for building tanks, but rather on credit to finance growth and the wellbeing of their citizens. The countries that lose access to credit, or indebt themselves excessively, are left in a situation of subordination equivalent to that of the occupied countries in earlier days. Countries that have access to credit are in a position to preserve their autonomy, and to dictate economic policy to the debtors.

We need then to resolve access to credit. This is why the apparently technical question of a banking union is politically more relevant than anything else on the table. Just as Monnet created the European Coal and Steel Community, we need a supra-national banking union to ensure the functioning of the financial sector. And as Monnet would demonstrate, this option is less costly than the present system, so that we can legitimize it politically without need of a federation. The horse, he would say, goes before the cart, not behind, and you don't start a house with the roof.