Because the euro printing press is in the hands of the European Central Bank, the central bank overseeing the whole of the euro area, less obviously, it also creates a situation that is tantamount to member states having to borrow in a foreign currency. This dramatically raises the risk of sovereign default in bad times, as became evident in the 2010-12 euro sovereign debt crisis, quelled only by decisive action by the ECB.

The migrant crisis exposed another flaw in the EU's architecture: citizens are free to move and work (and in the 22 member states in the Schengen Area borders have been abolished), but it is member states that are mainly responsible for policing the external border.

Two choices

Such a state of affairs is neither sensible nor sustainable, as has been widely recognised by EU leaders in the wake of the crises in numerous roadmap-setting reports and partly acted upon: by establishing some fiscal risk-sharing mechanisms, by adding aspects of a banking union to the monetary union, and by upgrading the role of the EU in border protection.

The EU faces two choices. It can continue on the path of "ever closer union" and pool national sovereignty in a more consistent way, or it can allow member states to take back some of the sovereignty they have ceded and fashion looser, more functional co-operative arrangements. Conceivably, subsets of member states could take different paths. It doesn't have to be "one size fits all". Indeed, the European Commission laid out such a possibility in its March 2017 White Paper on the Future of Europe.

The migrant crisis from 2015 exposed serious flaws in the political architecture of the EU. MAURICIO LIMA

Brexit needs to be understood in this wider context. Britain, admittedly by a narrow margin, decided to take back some or a large part – precisely how much is yet to be determined – of the sovereignty it had previously (perhaps to an extent unwittingly) ceded to the EU. Britain is not leaving a fixed entity, but rather one that itself is in flux: Brexit is as much about the future of Europe as it is about the future of Britain.

The EU27 should have approached the Brexit negotiations from this perspective, situating the issue of how to accommodate the desire of its second-largest member state to repatriate some of its sovereignty in the context of the larger existential question of what configuration of sovereignty-sharing the EU aspires to in the future.


Instead, it has taken a narrow, bureaucratic approach, putting the technocratic cart before the political horse. For instance, in clear contravention of the spirit of Article 50, the European Council refused to discuss the future relationship before reaching agreement on withdrawal issues.

This is a missed opportunity, on both sides. And the stakes are high: as a bloc, the EU is the second-largest economy in the world and modern Europe has been forged from the bloody lessons of history.

But it is not too late. How to produce a sensible and durable configuration of sovereignty-sharing among EU member states, including Britain, is a deeply political issue. It is time for the statesmen and stateswomen of Europe to step forth and do their job. Political leadership – not bureaucratic nit-picking – is what is called for now.

Paul Sheard is senior fellow at the Mossavar-Rahmani Centre for Business and Government, Harvard Kennedy School.