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Peace comes from within. Do not seek it without – Buddha

Whither the European (Dis)Union?

Posted by Ram Kumar Shrestha on November 14, 2011


Is significantly greater integration the surest way to prevent both the euro and even the entire European Union from

A droplet of water falls from a tap in front of the euro sculpture at the European Central Bank in Frankfurt, Germany, Friday, Nov.11, 2011. (Photo: Michael Probst / AP)

blowing apart? Or is EU federation–and the basic powers national governments now wield being weakened in the process–exactly the kind of radical fusion certain to send countries jealous of their sovereignty fleeing for the exits? As euro zone members now consider drastic, big-bang solutions to overcoming their currency’s crisis, leaders of all 27 EU member states find themselves grappling with the question of whether more or less Europe is necessary to safeguard the bloc’s future.

The spread of the single currency’s existential crisis–which began as a debt problem initially believed to imperil only a few small nations before expanding to shake Europe’s biggest economies to their foundations–mirrors the rising pressure posed by a similarly essential dilemma over the wider European Union project, and evoking similar denial from leaders. While most officials agree that deep and dramatic measures must be undertaken to finally contain the debt-driven euro emergency, their concord evaporates over the different options for action—especially centralization of budget and debt rules, and giving real intervention power to the European Central Bank. Central to that disagreement are clashing views over just how bound together EU members should be—a long-standing confrontation between Euroenthusiasts and Euroskeptics that has resurged in crisis anew. As such, moves to save the euro will probably shape the direction—or even future—of the entire EU as it seek a collective horizon to look toward.

News reports Nov. 10 stated France and Germany were consulting partners on potentially radical harmonization measures between euro zone members—or at least those capable of and willing to accept far stricter budgetary and fiscal rules that greater convergence would involve. If true, it suggests the euro zone’s two biggest economies are contemplating tossing unsustainably indebted currency partners out of what would become a smaller, tighter euro ship. German Chancellor Angela Merkel denied those reports, insisting scission of the euro 17 wasn’t an option. Yet her comments elsewhere indicated the status quo could not endure, either.

“The current situation in Europe surely is unpleasant enough to conduct a change for the better,” Merkel told a conference in Berlin last Wednesday. “It is time for a breakthrough to a new Europe. A community that says, regardless of what happens in the rest of the world, that it can never again change its ground rules–that community simply can’t survive.”

That sure sounds like fundamental revamp—especially aside similar comments French President Nicolas Sarkozy made about necessary changes in the EU to reflect contrasting ambitions, plans, and objectives among members. On Nov. 9, Sarkozy said both the EU’s current configuration—with 17 members with excessively contrasting economic health all using the euro; and 10 others retaining national currencies—and inevitable expansion of the bloc involved too much diversity to pretend a one-size-fits-all approach can work any more. “Clearly, there will be a two-speed Europe–one speed that moves toward more integration in the euro zone, and one speed for a confederation in the EU,” Sarkozy said.

That comment glosses over the fact that the euro leaves the EU two-tiered already—and that moves to save the currency will make further layering inevitable. Even if debt-ravaged euro members aren’t eventually thrown overboard, the imposition of more confining budgetary and deficit rules across the euro zone–limiting spending decisions by national governments as a result—now seems unavoidable. And that’s spooking EU members like the UK, which worry their retention of national currencies may relegate them to a loose-knit rump of states that risks being left behind as increasingly integrated, harmonized countries race ahead with common projects. Which is one reason why Britain has remained outspoken in its calls for decisive measures to shore up a currency it has refused to adopt: it’s rather like reversing the Groucho Marx joke about memberships to undeserving groups.

“Decisions that affect the 27 must always be taken by the 27,” warned UK deputy prime minister Nick Clegg in Brussels Wednesday, sounding British insistence that non-euro continue having their say about the currency–and in so doing prevent the euro zone from becoming “a club within a club”.

But is already is–as evidenced by the failure of non-euro countries to provide funds for bailout plans to stem the crisis they offer costly solutions to. And that’s just one sign of the rather iffy unity within and across Europe that raise questions about where it should go from here. The coalition government of British premier David Cameron is currently resisting a revolt  by a group of Euroskeptic Conservative legislators exploiting the euro crisis to demand a referendum on continued UK membership in the EU. Yet even as Cameron has fought that anti-EU offensive off, he’s outraged euro country leaders by lecturing them at summits on how to save a currency Britain views as the icon of a more ambitious, integrated, and federated Europe the UK dreads. During on crisis meeting last month, Sarkozy snapped at Cameron saying he was “sick” of Britain having a say in meetings about a euro it shuns.

“You say you hate the euro,” Sarkozy reportedly spat. “You didn’t want to join and now you want to interfere in our meetings.”

Such is the current state of European togetherness–and good luck finding a middle ground in it. Even EU officials who staunchly oppose moves that could widen the de facto internal divide created by the euro are also careful to remind countries like the UK, Sweden, Denmark, and Poland that their use of national monies over the single currency is an exception with a shelf life.  “The euro area is not an opt-out from the EU. In fact, all the EU should have the euro as its currency,” noted Jose Manuel Barroso, European Commission President Wednesday. “A split Union will not work.”

But like Cameron and Sarkozy’s comments, Barroso’s remark ignores the fact the EU already is split—into currency blocs, attitudes on integration and federalism, views on market regulation, and immigration. Those essential differences on what the EU should do–or aspire to–are taking clearer form as the debt drama appears to put all or most of the European project at risk. Until recently, the euro was the most tangible sign of European cooperation and coordination. Now, with the crisis darkening almost daily, the survival of the euro—and perhaps EU itself—may depend on greater teamwork and more surrender of individual national ambition to common cause, not less. One way or the other, something’s got to give—and probably pretty soon.


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