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The fact that the integration has played a big role in spreading of the recession through the Union does not necessarily mean that the integration is not good for the Union. In the words of Adebahr (2009 p. 1), “a European ‘union state’ is inevitable-if Europe’s nation states hope to survive.” He further argues that, the process of European integration has long ceased to be a matter of choice; It is an urgent necessity and needs to go far beyond the Lisbon Treaty, he adds more weight to his argument and claims that, In light of the international economic crisis and climate change, the creation of a European “Union state” is the only way forward (Adebahr 2009, p. 1).

Adebahr (2009 p. 3) argues that the European Union is no longer an integration of choice but an integration of necessity. He argues that there is a need for even more strong integration than it level at the present: the current level of integration is not enough to deal with global challenges. Despite the fact that the member states are at liberty to reject or agree to greater political integration, Adebahr (2009) argues that if the members union have to survive in the face of the global challenges then the only way out to embrace a greater economic integration.

The recession demands that the European Union forms an economic government. There is an urgent need for the economic and employment policy to be shifted from the Member union to the Union. This transfer of responsibility will to a great extent help to reduce the national financial sovereignty for collective crisis management interest. The European Systematic Risk Council with the European Central bank will coordinate and set binding parameters for the union members.  According to Zoli (2009, p. 1), the EU has taken some steps to ensure that the recession issue does not escalate to unmanageable levels:

Central banks, including the European Central Bank, have been providing liquidity support and easing monetary policy, while governments have committed large resources to guarantee, recapitalize and resolve financial institutions. Fiscal policy has been used to shore up demand. Faced with financing difficulties, a number of countries in central and Eastern Europe have undertaken adjustment programs supported by financial assistance from the IMF, the European Union (EU), and other bilateral and multilateral sources (Zoli 2009, p. 1).

Zoli (2009 p. 1) reports that though all these have been taken into consideration, still there is a need for more coordination  because the financial sector is yet to return to normal. He claims that coordinated policy response is a key solution to the EU especially in the public policies. In the financial sector there is a need for more forceful policies in the following areas:

  • There is need for continued provision of liquidity and credit engagement where necessary.
  • There is a need for the recapitalization of viable institutions. Assets which are impaired and difficult to assess need to be ring-fenced.
  • Recognition of credible loss based on the stress tests taking into consideration deterioration expectancy in asset quality.
  • There is also a need for bank recapitalization to be carried out on common macroeconomic parameters in order for the stress tests which determines the capital needs to avoid distortions.
  • There is also a need that the adherence to the, “crisis management principles of the EU’s Economic and Financial Affairs Council (ECOFIN), also by countries that are not members of the EU, would be helpful” (Zola 2009, p. 1).

There is a need for the member states to aim at further integration in order to effectively fight economic crisis. If the union has to be successful then there will be a need for it to allow the shift of policy making responsibilities especially in the economic sector to the Union (Eichengreen 2008, p. 116). This will make it possible for the Union to implement policies which will take a collective interest of the Union members as a whole. This will shield the Union from turbulent times in the future. Therefore the European Union has chances of surviving but on condition that the integration level moves to a high level (Greek 2010, par. 1).

It is evident the European Union is struggling to overcome the recession. The highly integrated Union is been affected by the fact that the member states depend on each other and as such a disturbance on one of the state spills over to the rest of the members through trade and investment channels. The recession has shaken various sectors of the economy within the European Union. Attempts which have been made by the European central bank have made attempts to restore the financial situation into normal. Despite all the efforts being made by the members and the European Central bank, it is clear that there is need for more integration in the area of public policies especially those which touch on the economy of the members. There is need for the adapting of decisions which cater for the collective interest of all the union members. This can only be possible if there is a transfer of decision making responsibilities from the member states to the Union. This will make it possible for the common interest of the Union to be served.

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