Zoellick on the Eurozone crisis

On the day that his successor was selected, World Bank president Robert Zoellick published an op-ed advising the European Union how to navigate its way out of the Euro crisis. Zoellick warns that the two of the most commonly touted solutions–a large international firewall and an opening of the monetary spigots by the European Central ...

By , a professor at Indiana University’s Hamilton Lugar School of Global and International Studies.

On the day that his successor was selected, World Bank president Robert Zoellick published an op-ed advising the European Union how to navigate its way out of the Euro crisis. Zoellick warns that the two of the most commonly touted solutions--a large international firewall and an opening of the monetary spigots by the European Central Bank--are implausible and risk becoming distractions. The solution, he says, is to tap the multiple other sources of EU strength:

On the day that his successor was selected, World Bank president Robert Zoellick published an op-ed advising the European Union how to navigate its way out of the Euro crisis. Zoellick warns that the two of the most commonly touted solutions–a large international firewall and an opening of the monetary spigots by the European Central Bank–are implausible and risk becoming distractions. The solution, he says, is to tap the multiple other sources of EU strength:

Instead of quarrelling over firewalls, Europeans should add just a fraction – say €10bn – to the capital of the European Investment Bank…the EIB could use more capital to borrow and then invest to support structural reforms, showing Spaniards and Italians that their sacrifices will draw productive investments. The EIB is now even led by a talented German, Werner Hoyer, from the governing coalition. President José Manuel Barroso of the European Commission should also demand disbursement of the billions of euros of structural and cohesion funds that sit on its books while poorer parts of Europe go wanting; find the logjam and break it.

The single market – the very fibre of EU integration – could also come to the rescue. Although goods move freely in the EU, the service sector in many countries – including Germany – could open up more. Labour movement is also far more limited than in a true single market. Whether the cause is language, habits, matching jobs with workers, or cost of relocation, now is the moment to overcome the hurdles and advance the true unification of the EU. Show people who want to work that the EU wants them, too.

David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist

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