(November 11, 2011) The EU was no noble experiment worth preserving, but the world’s grandest experiment in social engineering.
The dream of a politically unified, economically integrated Europe is now dead. “It’s impossible,” French President Nicolas Sarkozy said this week, in admitting the need for a “two-speed Europe” that sheds debt-laden Greece and/or other non-core countries. German Chancellor Angela Merkel, the only other European leader able to decide Europe’s fate, is believed to have agreed, her officials arguing that the present European Union Treaty will need to be replaced with something workable in “a breakthrough to a new Europe.”
The nature of this new Europe, or two-speed Europe, or two Europes, as some fear, will now be formally discussed amid much hand-wringing at a summit in Brussels on Dec. 9. All in attendance will lament “the end of Europe as we know it,” as one EU diplomat put it to Reuters.
Their lament is misplaced. The EU was no noble experiment worth preserving but rather the world’s grandest experiment in social engineering – a term EU proponents have themselves embraced. A rapid departure of Greece and others from the EU — a bureaucrat-run behemoth likely to collapse in the coming years — would in fact be a godsend. The smaller the EU becomes, and the faster, the softer its fall.
The European Union was from its inception largely a product of fear: the French fear of the more powerful Germans, with whom they had fought a traumatic war in each of the preceding three generations, and the German fear of themselves, particularly after their leaders had twice led them to ruin in world wars. A union of the European nations, the elites in these and other European nations believed, would dampen nationalism by converting the parochial citizens of Europe’s nations into more worldly Europeans. To help sell the concept, many alluded to a United States of Europe, and all the power and prosperity that implied.
But the analogy with the United States of America was wide of the mark. Unlike America, founded by people who voluntarily came to a new continent, who created a common culture with a common language, and who built the world’s greatest economy on the strength of shared values and a meritocracy, the European Union was a top-down construct of often warring peoples who had little in common: not culture, not language, and certainly not a meritocracy. Behind the European Union, in fact, was another union, of socialists intent on delivering the welfare state in league with multinationals who would benefit from their regulations.
Step by step, Europe’s leaders led their citizenries into a deeper and deeper commitment to a European superstate. In this the leaders were successful — the European Union now contains 27 states in varying degrees of integration, with more lined up, waiting their turn to enter.
And why wouldn’t the states — many of them with weak economies and poor safety nets for their citizens — want in? Not only would they gain access to one of the world’s largest free-trade zones for their goods and services but they’d be able to borrow money at about the same interest rates as available to the EU’s powerhouse and assumed guarantor, Germany.
And borrow they did, from banks who viewed a loan to a Greece or a Spain to be almost as secure as a loan to Germany. The easy money inflated real estate prices, creating a general sense of prosperity. And it financed generous health care, unemployment benefits, pensions and other entitlements.
When one country or another within Europe suffered a setback to its economy, as inevitably occurred, more easy money papered over the cracks. Debts rose along with a general public satisfaction with the seemingly rock-solid EU.
Then the EU rock cracked with the economic crisis of 2008. In the United States of America, the federal government decided it would bail out its financial sector on behalf of the economies of the 50 states in its union. In the United States of Europe, Angela Merkel announced that the EU — i.e., Germany — would do no such thing. Instead, she said, each country was on its own to deal with its own financial sector. Unlike the United States of America, which proved to be a true, cohesive political entity, the United States of Europe proved to be an illusion.
This realization — that Germans were committed to Germans more than to the grand European project —precipitated the crisis the EU now faces. Financiers started to lend money to Greece at higher interest rates that reflected the Greek, not the German economy, and everything went in reverse for the weak economies in the EU — their real estate bubbles burst and the wellbeing of their businesses plummeted, as did government revenues and government borrowing ability.
The EU is now in shambles, with many predicting a prolonged recession and some a depression. The weeks and months ahead are sure to be filled with crises, talks of bailouts and schemes to reform or restructure the EU. Ultimately, all stopgaps will fail because the peoples of Europe are not one, regardless of what utopians might desire. The dream of peace and prosperity through union, being illusory, must fail. Europe’s leaders have again led many of their peoples to ruin.
Lawrence Solomon is executive director of Urban Renaissance Institute.