The Continent's Nightmare Continues
Two years ago, the Lisbon Treaty created a stronger, more powerful European Union with a president and foreign minister. The continent seemed to have answered Henry Kissinger’s derisive question: What is the phone number for Europe? But it still isn’t clear who will answer.
Europe is the world’s most important economic aggregation. The Continent hosts several of the world’s most venerable democracies. Europe’s historical and cultural ties circle the globe.
However, the EU has failed to live up to the lofty ambitions of the Eurocrats, the business, political, bureaucratic and academic elites who dominate continental politics and policy. Europe remains a geographic conglomeration, not a political unit.
While the common economic market is huge, the continent isn’t functioning very well as an economic collaboration. Moreover, there is no common foreign policy, let alone a unified military. Most European politicians advocate further political consolidation in Brussels but disagree on the specific form. The European public seems increasingly skeptical of what the European project has become.
Euro on the Brink
The EU’s immediate challenge is preserving what unity it has achieved, most notably the euro zone. As Greece inched toward another bailout, violent protests against the unity government’s further cutbacks engulfed Athens. Private creditors continue to resist baptizing Greece’s de facto default, while official creditors continue to resist accepting any losses. Earlier this week, after withholding approval of aid to Greece while seeking greater budget cutbacks and political assurances by Athens, European Union officials approved a $170 billion second bailout. Nevertheless, European Union negotiators withheld final approval of aid to Greece while seeking greater budget cutbacks and political assurances by Athens. Many continental analysts and political leaders believe that an official Greek default is inevitable. The only question is whether Athens could then retain the euro; increasingly Greece’s neighbors aren’t interested in the answer.
Worse, efforts to contain the crisis so far have failed. Moody’s recently downgraded Portugal, which may be heading toward a Greek-style crash. The agency reduced ratings for Spain and Italy as well and cut the outlook for France and Great Britain. Refinancing existing debt will be more difficult as global investors back away from European securities, creating “a pretty terrible spiral,” observed Peter R. Fisher of asset manager BlackRock. And every new EU bailout further burdens already heavily indebted states.
Help is not likely to come from overseas. The Europeans hoped their bailout fund would attract private investors and foreign nations, including China, but no one wants to toss their good money after Europe’s bad investments. The International Monetary Fund (IMF) played a smaller role than expected, and the Europeans will pay much of that bill. No money will come from Washington, at least directly; Republicans already are targeting America’s pending contribution to the IMF lest it be used to bail out the improvident Europeans.
The Eurocrats’ Nightmare
Some Eurocrats fear the impact on the EU as well. If the euro zone shrinks—or, worse, collapses—expansion of the union and its authority will halt. The idea of a European nation-state will be moribund, if not formally buried.
Tying Germany to its neighbors took on greater urgency after World War II. European cooperation proceeded through the common market, but political unification trailed far behind.
So the Eurocrats launched an indirect approach. The euro zone’s architects recognized the challenge of adopting a common monetary policy without a common budget policy, but they assumed economic policy and political institutions would follow. Thus was launched the Euro, adopted by seventeen of the EU’s twenty-seven members. Now, explained German Chancellor Angela Merkel, Europe “must overcome the architectural flaws that worked their way into the economic and monetary union during its formation.”
The Lisbon Treaty began as a continental constitution which would expand Brussels’ authority and reduce national independence. But in 2005, the Dutch and French both voted no. The Eurocrats then relaunched the constitution as a treaty, which allowed parliamentary approval in every member nation other than Ireland, whose constitution required a popular vote. But the Irish voted no, again halting the bandwagon. Under EU pressure, the Irish government held another poll and won the desired result.
European officialdom celebrated the new EU but chose two indistinguishable and undistinguished politicians for the new positions of president and foreign minister. Then, the euro-zone crisis exploded. The common currency yoked together relatively efficient northern European countries with congenitally improvident Mediterranean states. The latter attempted to counteract lost competitiveness with increased borrowing. The bill finally came due.
Greece led the crisis parade, followed by Ireland and Portugal. But true disaster threatened with far-larger Spain and Italy—perhaps too big to fail, probably too big to save. The Eurocratic response was always the same: if new problems threatened, explained European Council president Herman Van Rompuy, “we’ll do more.”