No relief for euro pains.

• Author: Qualls, Eduard J.
• Position: ECONOMIC OBSERVER - Debt problems and fiscal sovereignty of Euro nations

INTRODUCTION OF THE EURO was supposed to be one of the crowning achievements of European unification. Instead, it has come to be the albatross hanging from the neck of the European Union. There are several operational reasons why the euro is an intransigent problem.

First is its tying together of national economies, each of which has continued to operate as it has for centuries, as embodiments of the disparate cultures in which each of those economies is embedded. These differences are far beyond those differences that faced the American Founders, yet the Europeans still believe they can overcome them.

Beyond this is a far more fundamental problem: the very nature of the system of the euro that was set up to enable its adoption and usage. The tag phrase for the eurobonds that started the upheaval is that of "sovereign debt." This is a misnomer, however. None of the debt issued by the members of the European Union actually is sovereign. It has not been so upon the adoption of the euro.

It is not just that any new debt is not sovereign. On adoption of the euro, all the existing public debt of those adopters became nonsovereign, too, because the currencies originally used to value it no longer were real--they no longer were money. While those tokens turned into Americans' 1983-summer-trip-to-Europe chotchkes, deutsch marks, lira, and francs themselves became nothing but fixed-value variables to plug into euro spreadsheets.

National sovereignty requires a handful of qualities. These summarily can be tagged as military, fiscal, legal, migration, and international. Control of every one of these areas of government function is required for true sovereignty--that is, the quality of being an independent nation state. What never was advertised to the peoples of the nations before their adoption of the euro was that its introduction ended each of those nations' sovereignty, and it is in those nations' loss of fiscal sovereignty that the true root of the current problem lies.

The cardinal aspects of fiscal sovereignty are that a state has independent control over its currency, taxation and budgeting powers, trade and business practices, and debt policies. It is from the Eurozone's lack of a unified position in currency, budgeting, and debt policy that the dysfunction resides.

In the moment they took to the euro, these nations surrendered their control over their individual currencies. Yet, at the same time, there was no government of Eurozonia that...