Slowly, word is getting round – even in Germany – that the financial crisis could destroy the European unification project in its entirety, because it demonstrates, quite relentlessly, the weaknesses of the eurozone and its construction.Those weaknesses are less financial or economic than political.
The Maastricht Treaty established a monetary union, but the political union that is an indispensable precondition for the common currency’s success remained a mere promise.
The euro, and the countries that adopted it, are now paying the price.
The eurozone now rests on the shaky basis of a confederation of states that are committed both to a monetary union and to retaining their fiscal sovereignty.
At a time of crisis, that cannot work.
At the beginning of the crisis, in 2007-2008, the eurozone’s fundamental flaws could have been corrected had Germany been willing to support a joint European crisis response.
But German officials preferred to maintain national primacy – and thus a confederational approach to Europe.
Throughout history, confederations have never really worked, because the question of sovereignty (and thus of power and legitimacy) remains unresolved. The United States is a case in point. After winning independence, the American colonies united loosely under the Articles of Confederation. But that arrangement failed financially and economically, and the US soon moved towards a full federation.
Today, Europe – or, more precisely, the eurozone – faces an almost identical situation, except that the historical conditions for further integration are much more complex and difficult than they were in post-independence America.
Europe has three choices. Muddling through as before would only escalate and prolong the crisis. Ending the monetary union would end the European project itself, and wreak unmanageable havoc. Finally, Europe could move forward to real economic and political integration – a step that today’s leaders lack the confidence to take, because they don’t believe that they have the necessary public support at home.
Much, therefore, speaks for starting with a combination of the first and second options. Then, once the European project is halfway over the cliff, the federalist moment might arrive. But the operative word is “might”: a headlong plunge into the abyss might prove equally likely.
Europe’s do-nothing approach to the crisis has already produced visibly adverse consequences. Elected officials’ passivity has stoked popular mistrust, which now threatens the European project. Indeed, the crisis is beginning to erode the very foundations – the Franco-German and transatlantic partnerships – of a post-war European order that has ensured a period of peace and prosperity without precedent in the history of the continent.
Financial-market pressure has now reached France, and poses a danger that is far from over. If France is brought to its knees and Germany doesn’t stand by its partner unwaveringly and with everything that it has to offer, the European catastrophe will be complete. And that could happen sooner rather than later: France cannot and will not give up on the Mediterranean region, so the exit fantasies entertained by rich northern Europeans (Germans, above all) endanger the Franco-German pillar of European peace.
Across the Atlantic, America’s fiscal crisis and weak economic growth will force it to reduce its global military commitments. Moreover, the US will orient itself increasingly towards the Pacific rather than the Atlantic. For Europeans, with our turbulent eastern and southern neighborhoods, this presents an additional security challenge for which we are materially and intellectually unprepared. Even today, Europe’s military weakness is working to undermine the transatlantic relationship.
An additional threat to the transatlantic alliance arises from the emerging new world order. The coming years, indeed decades, will be characterised by an increasingly aggressive US-Chinese dualism as China becomes stronger and America’s weakness persists. While this rivalry will have a military component, as evidenced by China’s enormous military buildup, it will manifest itself primarily in terms of economic, political, and normative spheres of influence. East and Southeast Asia and the Pacific will play the central role here.
But China will try to draw Europe into this new global game. Indeed, it has already begun to do so. The recent visits by Prime Minister Wen Jiabao to Europe’s crisis countries, to which he offered generous loans and assistance, made this strikingly clear. And America’s weakness, the growing dependence of European (especially German) exports on the Chinese market, and the enticements of the Far East more generally, will nurture a new and promising Eurasian perspective as Transatlanticism declines.
European illusions about Asia will no longer be directed at Russia, which, apart from its natural resources, will simply have nothing to offer. No, this time, the temptation will spring from China, which well understands Europe’s significance in its emerging geopolitical contest with (and against) the US.
As with Germany vis-à-vis France, here, too, Europe must stand unwaveringly by its transatlantic partner to avoid putting itself in great jeopardy. The two foundations of Europe’s seven decades of peace are cracking. Repairing them requires nothing less than pressing ahead, at long last, toward a strong, united Europe.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.