PARIS (Reuters) – When European Commission President Jose Manuel Barroso began his annual State of the Union address by declaring that “we are facing the greatest challenge in the history of our union,” it was an understatement rather than hyperbole.
The sovereign debt crisis shaking the euro zone puts at risk the survival of the single currency and ultimately the wider 27-nation European Union with its single market, open borders and free movement of capital, goods and people.
“If we do not go for further integration, we risk fragmentation,” Barroso told the European Parliament. “We need to complete our monetary union with an economic union.”
Confidence and trust in governments and in Europe is at a low ebb. The financial turmoil if Greece defaulted, as many economists expect within months, would be unlikely to leave Europe’s rules-based market unscathed in the long term.
Resurgent nationalism and populism could tear Europe apart, Barroso warned.
The crisis requires a united front. Yet the EU is politically more disunited than for decades.