Wednesday, January 25, 2012

The Euro Crisis Darker Side

Since the Greek Medusa intervened, the meetings in Brussels look more and more like providing palliative care rather than a cure. Meanwhile, the metastasis has set in and contagion advances like a brushfire. I believe that half-baked solutions will be found at the end. Member countries of the euro zone will remain morose but the euro will survive, while certain common rules and the role of the ECB will be revamped. If there will ever be a fiscal or economic consensus remains a question mark. Germany stands alone since the French lost their AAA rating and this hegemony starts to have political consequences.

The euro was supposed to make “Europeans”. So much for that. The EU is already split, de facto, between southern and northern blocks. Meanwhile Germany is looking eastward again where Poland and Hungary, for different reasons, are becoming more assertive. Russia is considering a EU2 to regain its lost zone of influence in the Caucasus. The US is becoming a more distant partner, steering a new political/military/economic strategy eastward. Turkey has switched from its European ambition towards its Ottoman geopolitical psyche. In fact the EU stands alone, divided and almost irrelevant despite its still formidable economic weight. The soft power is still there, the hard power is dubious for the least.

The Treaty of Rome was the cornerstone for a future European Federation. The Treaty of Maastricht might have been the first nail in the coffin. Macro vision had to make room for bureaucratic areas of competing interests. The EU has lost its glamour and its constituents, who look homesick for their former currency and control over eco/financial policies while resenting what is felt as Berlin’s unstoppable rise and stubborn financial rigor. All this creates a distraction from what were the EU’s ambitions and lofty goals and could very well lead to dangerous fault lines in Europe.

One should not feast on one’s own doomsday prophecies since they might be self-fulfilling. On the other hand one should not hide from the play in the play. This economic downturn might very well have unpleasant political consequences and awaken populist gut reactions which we do not need. The EU is paying a heavy price for its rush to enlargement which did not pay enough attention to immigration and asymmetry. Opt-out mechanisms and ad hoc collaborations between the willing deserve closer attention. The workings between member states and of the EBC were too weak from the start. They need to be reinforced and made obligatory.

The euro created a euphoria at the beginning. It is creating problems now, more than it creates Europeans but it is still worth fighting for, even at the price of switching from orthodoxy to pragmatism. The Common Market worked because Jean Monet foresaw an incremental concept which eventually led to the EU. The euro may have fatally failed because it has put ambition ahead of the reality of the larger EU which is a heterodox construction wherein too many contradictions co-exist. The Commission was obliged to retreat and to let the Council rule. We risk seeing the inter-governmental arrangements fill the space left by the federalist withdrawal. Clusters of likeminded states risk to undermine the core idea of a European Federation, and weaken the soft power which was Europe’s strength. The euro battle is more than a shock of wills or conceptual opposite visions. Its outcome will determine if the EU remains relevant in a world where the US, China and other BRICS are shaping the future. Giving a facelift to old antagonisms is not the answer.

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