At 60, Europe's financial mess

On Sunday May 9, the European Union (EU) turns 60. Decades ago, to become a sexagenarian meant to cross the line towards old age.Today it is simply to start a third act of a professional and personal life, in which one cannot afford to make a fool of one’s self. At 60, one has to be serious and responsible. The EU has to honour its birthday.

On May 9, 1950, Robert Schuman, minister of foreign affairs, France, surprised the startled bunch of journalists who had gathered in the Salon del l’Horloge of the Quai d’Orsay with an announcement that only a few detected as revolutionary. Schuman, reading a script by economic adviser Jean Monnet, vouched to place the industries of coal and steel in the hands of an independent institution. This way he invited Germany to accept the challenge, extending the offer to the rest of the European countries, just coming out of the nightmare of World War II.

The result of this proposal was the European Coal and Steel Community, founded by the Treaty of Paris in 1951, the predecessor of the European Economic Community, a new entity that, together with the European Community of Atomic Energy, would be the seed of the final European Community, founded by the Treaty of Rome of 1957. By the time of the Maastricht Treaty of 1992, the rather modest original project had been transformed into the current European Union, today comprised of 27 members, after it incorporated in 2004 ten countries that had formerly been under Soviet domination.

Economic crises

But the EU at almost 60 seems to be in a state of crisis, even though it recently passed the Treaty of Lisbon, which was designed to give its institutions more flexibility and reinforce its external actions by creating a more stable presidency and a position resembling a foreign minister. This reform has coincided with one of the most serious economic crises the continent has seen, threatening the European social fabric, with grave consequences for its political structure.

Among the culprits named in the crisis is the euro, the common currency shared by the 16 countries that form the ‘eurozone’ (many others would like to join, but a minority still resists further expansion). The fact is that for the first time in history, a currency has become an alternative to the dollar in financial transactions and as deposit unit.

The euro is one of the most identifiable symbols of European integration; it has also been made the scapegoat for all the errors, real and imagined, that have generated scandalous unemployment levels, indigestible government deficits, and an unsustainable debt.

The euro is guilty as charged, because with its adoption the countries had to perform a kind of self-mutilation, burying their liras, marks and francs. Euro-country governments cannot manoeuvre as in the good old times, via ostrich tactics such as printing money or currency devaluation. But the disintegration of the eurozone would be the death blow to European integration.

However, the cancer that is attacking the European integration process has other causes that are no less important than financial mistakes and the fraudulent behaviour. The first is the absence of the foundational leadership. Today’s stewardship is light years behind that of 1950 and 1957 that gave birth to European integration. The indecision of today’s high officials and their surrender to populist temptations are an obstacle to finding suitable remedies. They look to the electorates, seduced by short term solutions to problems as grave as those of the 1920s. Nationalistic egotisms have substituted solidarity and internal cohesion that aimed to reduce the internal and regional disparities that propelled the Nazi, fascist, and communist regimes in the past.

Proof of this mistaken tactic is the ambivalence toward the budgetary Greek disaster, and more to come in Ireland and Iberia. What is curious is the fact that the main cause of the general crisis of the EU as a whole is the danger of ‘dying of success’. The EU has fulfiled its essential mission: “to make war unthinkable and materially impossible”, as stated in the original document crafted by Schuman and Monnet, known as the ‘Declaration of Interdependence’. The new European generations are incapable of appreciating this accomplishment.

The paradox is that the EU has become a global point of reference for any experiment in regional integration. One could respond to the EU’s critics with a variation of Winston Churchill’s famous quip about democracy: the EU is the worst example of regional integration — except for the others. Unless one proves the opposite, there is no other similar alternative for Europe and the rest of the planet.

IPS