European economy on the brink

It is hard to see how the European Union and the euro can find their way out of the imbroglio their leaders have led themselves, and all Europeanists, into.

This is the situation: the December 9 European Summit was presented as a crucial opportunity for positive action, and yet for the overwhelming majority of Europeans it produced nothing but more disappointments. As is all too clear these days, the crisis of the euro is far from over. The currency remains hostage to the battering of speculation and the whims of the ratings agencies.

The disintegration of the EU cannot be entirely ruled out, despite the fact that the distancing of the UK and the isolation of prime minister David Cameron was a relief to the Europeanists and left Britain's allies in a tight spot: Sweden, the Czech Republic, Poland, Denmark, Hungary, Bulgaria, Estonia, Lithuania, and Rumania -not to mention the City.

Pushing forward

In this confusing scenario, it is German chancellor Angela Merkel who is emerging as the winner thanks to her trademark stubbornness and lack of vision. She continues to push forward despite the growing criticisms directed at her both from within and outside Germany, including from certain important Christian Democrats, like her predecessor Helmut Kohl.

As for Nicholas Sarkozy, who has transformed himself into her assistant, he has lost his way altogether, a fact that is sure to hurt his chances for reelection.

The result: the European Central Bank continues to lack the tools necessary to address a crisis of this nature, in sharp contrast to other central banks -of Japan or the UK, for example -or the US Federal Reserve.

Almost no one listens to the European Commission or to the President of the EU, while the European Parliament, which is technically the body representing the "European people" and could -and should- have a voice in regional summits, is ignored. All of which makes a defense of the European project exceedingly difficult.

If this situation leads to collapse, the blame will lie with the lack of courage and ability of the leaders and members of the institutions mentioned above, who in the comfort of their lofty positions avoid all but the most routine opinions and statements, issuing promises that no one can be sure of keeping and taking very few steps to defend the euro and lower the risk that the Union will disintegrate. And so we remain at the edge of the abyss without charting a course forward or finding a path in line with the teachings of Jacques Delors, Helmut Kohl, Helmut Schmidt, or other beacons of the European project.

In this uncertain landscape, the big news is the distancing of Britain because the [unacceptable] demands of Cameron were not satisfied and because London was isolated from the group of its traditional European allies who thus far have not wanted to join the euro. This is how Britain has kept "one foot in North America and one in Europe".

Though it does clarify the UK's position, it creates problems for the City while eliminating the pressure Britain has long applied to convert the European project into a sort of European Free Trade Association.

Today fundamental values like solidarity and equality among all states are gradually disappearing. Social justice, one of the great post-war victories, is being eliminated bit by bit, and the same is true for human rights. The eminent German philosopher Jurgen Habermas has written that market speculation is corroding everything, including democracy.

It becomes clearer every day that unless there is a serious break with neoliberalism and prompt implementation of ethical regulation of globalisation, the EU and the euro will be drawn inexorably into a phase of serious decline that will affect first Europeans and then indirectly the entire rest of the world.

IPS
(The writer is ex-president and ex-prime minister of Portugal)

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