Ouch! This one hurts! At least for the political and economic establishment of Europe who are currently engaged in a massive PR campaign to strengthen the European union – in both monetary and political terms. Financial Times commentator Gideon Rachman, however, provides a complete different view.
“There is not a strong enough common political identity in Europe to support the single currency.”
Well, what Rachman points out, the EconoTwist’s have been indicating since the global financial crisis started to affect Europe, late 2008. Europe is not USA, it can never be, the core of the European culture is diversity. It has always been – for good and for bad – and it will stay that way for all forseeable future.
Like the recent agreement between Germany and France to go for a voluntary bail-in of Greek bondholders.
Take a look at the history; have a German-Franco alliance ever lasted for more than a couple of months?
Have the Brits and the French ever managed to agree on anything? (blaming Napoleon just doesn’t cut it).
The Austrians and the Hungarians will always be sceptical towards Serbians, and the whole western Europe needs lots of therapy sessions before they are ready to accept Russia – or any former Soviet republics
– as “one of their own.”
I guess I have to quote myself:
“The European Union is the result of – in this bloggers opinion – a well-meant, but unrealistic, political idea of equality and cohesion. An ideology that in theory is a very nice thought, but in reality very hard to achieve.”
As the Greek crisis worsens, voices are being raised demanding new and more radical approaches.
Forget the sticking plaster bailouts and slice-by-slice austerity packages. The ultimate solution to the euro zone debt crisis is a political union!
Okay. Enough of my self-righteous I-told-you-so remarks – here’s Gideon Rachman:
Last week Nout Wellink, the Dutch central bank governor, became the latest senior figure to float this idea, when he argued that the euro zone needs “an institutional set-up that has characteristics of a political union”.
According to Mr Wellink, “a European finance ministry would be an important step in the right direction.”
Jean-Claude Trichet, the head of the European Central Bank, has also backed the creation of a European finance ministry – which in turn implies a much larger central budget and more decisions on spending and taxation taken in Brussels, rather than in national capitals.
Those who argue that “political union” is the solution to the current crisis seem to believe that Europe’s problem is institutional.
Unlike the US, the euro zone does not have the political institutions to back up a common currency.
But if Europe was just equipped with a finance ministry or the facility to issue euro zone bonds or to tax citizens directly, everything could be fixed.
This is a profound misdiagnosis of the crisis. The real problem is political and cultural.
There is not a strong enough common political identity in Europe to support the single currency.
That is why German, Dutch and Finnish voters are revolting against the idea of bailing out Greece again – while Greeks riot against what they see as a new colonialism imposed from Brussels and Frankfurt.
To argue that even deeper political integration is the solution to this mess, is like recommending that a man with alcohol poisoning should treat himself with a more powerful brand of vodka.
It is important to understand that the origins of the current crisis lie precisely in the dream of political union in Europe.
For the true believers, currency union was always just a means to that greater end.
It was a way of “building Europe.”
If bits of the construction were missing – such as a European finance ministry – they could be added later.
Helmut Kohl, the chancellor of Germany in the early 1990’s, was so convinced of the need to bind a united Germany into the European Union that he was prepared to press ahead with the euro, in the face of 80 per cent opposition from the German public.
At a seminar in London last week, Joschka Fischer, a former German foreign minister, who is one of the boldest advocates of deeper European unity, was unrepentant in defending this elitist model of politics. He insisted that most important foreign policy decisions in postwar Germany had been made in the teeth of public opposition.
“It’s called leadership,” he explained.
Such leadership is all very well, if it is vindicated by events.
However, if elite decisions go wrong, they create a backlash – which is exactly what is happening in Europe now.
German voters were told repeatedly that the euro would be a stable currency and that they would not have to bail out southern Europe. They now feel betrayed and angry.
Greek, Irish, Spanish and Portuguese voters were told repeatedly that the euro was the route to wealth on a par with that of northern Europe.
They now associate the single currency with lost jobs, falling wages and slashed pensions. They too feel betrayed and angry.
As a result, the space for political manoeuvre is narrowing on either side of Europe’s creditor-debtor divide.
The Greek government can barely muster a majority to force through its latest austerity package.
The German government of Angela Merkel is losing support and is facing an increasingly Eurosceptic public.
Meanwhile, radical anti-European parties are on the rise in other creditor nations, such as Finland and the Netherlands.
Most European leaders still blithely assert that they will do whatever it takes to save the euro. But these leaders operate in democracies. If they take decisions that voters simply cannot accept, they will lose their jobs.
The relations between the people of the EU are cracking under the strain of the euro crisis.
In Athens, demonstrators wave EU flags with the swastika imposed upon it.
In Germany, the euro crisis has made it permissible to denounce profligate and corrupt southern Europeans.
A single currency that was meant to bring Europeans together is instead driving them apart.
The politics of fiscal transfer are tricky, even in long-established nation states.
Think of the strains between northern and southern Italy; or between Flanders and Wallonia in Belgium.
But the tensions are far worse in a newly created euro zone of 17 nations with different histories, cultures and levels of economic development.
Simply ignoring this – and trying to press ahead with a deeper political union – would invite an even more dangerous backlash in the future.
But if political union is not the answer to Europe’s problems, what is?
There are two possible solutions.
The euro zone leaders might somehow patch the current system up. Or the weaker members of the currency union – above all, Greece – could leave.
That process would be chaotic and dangerous.
But Greece, as it stands, is a demoralised country that has lost the sense that it controls its own government.
Leaving the euro might just be the beginning of a national regeneration.
(Finacial Times. June 21. 2011)
Still; 50 CEO’s of the biggest companies in Germany and France have launched their pro Euro campaign in the press of both countries.
They are placing full-page ads in German papers, under the headline “The Euro is necessary” (including a short text explaining why).
Le Monde prints the text as an Oped (free of charge, we presume) while the German papers print it as a commercial ad.
Mass circulation daily Bild has an interview with Gerhard Cromme, head of the supervisory board of ThyssenKrupp and one of the initiators of the campaign, in which he warns a failure of the euro would have “fatal consequences” for all of us.
Frankfurter Allgemeine Zeitung has a story in which companies that are owned by their bosses (not publicly traded companies) criticize the PR campaign by complaining that it encourages the German government to waste the taxpayer’s money on Greece.
….I’m trying really hard to not make any further comments…..
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