I think Krugman implicitly assumes that it's near impossible to solve the European fiscal and economic policy unification problem given the strength of nationalism, what we know to date about the sources of altruism, and neo-liberal political elements throughout Europe, even with a common currency. But then again, the EU has already implemented similar net transfers of welfare, albeit on a smaller scale, from most of the rest of Europe to (largely) French farmers in its common agricultural policies, so maybe he is too pessimistic.