Mention the words "national sovereignty" in Brussels and you are likely to get a pitying look. For those building the Europe of the 21st century, the idea of "sovereignty" has a distinctly passe, 19th-century ring to it. Europhiles admit that nation-states still exert a certain atavistic hold over the imaginations of ordinary Europeans. But the reality, according to Brussels orthodoxy, is that in the modern world European countries must "pool sovereignty" to get things done. The point was put well by Gerhard Schroder, the German chancellor, in a speech in the Netherlands in 1999, just after the birth of the single currency. "The introduction of the euro", declared the chancellor, "is probably the most important integrating step since the beginning of the unification process. This will require us to bury some erroneous ideas of national sovereignty." National control of interest rates came to an end with the arrival of the single currency. But the countries adopting the euro also approved rules limiting their sovereign control over decisions on taxing and spending. Unless a euro member is in a severe recession, it is not meant to run a budget deficit of more than 3% of GDP. Any country that breaches this ceiling for three years in a row is subject to sanctions, and ultimately to fines that can run to billions of euros. These strict rules, known as the "stability and growth pact", were adopted at the insistence above all of the Germans, who wanted an absolute assurance that countries with a long history of fiscal incontinence would not damage the euro-area economy.
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