Many people see reasons for optimism in Europe this year, citing signs of an economic "recovery," or noting improvement by some financial measures of EU "integration," or hoping that the EU parliamentary elections next week will bring a new and constructive cycle of pro-EU policy that will overcome the evident obstacles to the process of further political EU integration. An optimist might conclude that the worst is over for EU integration. I am not an optimist and I am certainly not alone.
European Union 2014: Another chapter in the "dis-integration" of the EU?
It is understood that the integration of the European Union is an ongoing and unfinished project, a process that has been driven by the pro-EU political will of its member states since its post-WWII inception to bring peace and prosperity to the political and economic union.
The recent era of EU integration, European Monetary Union, has its foundation in the 1992 Maastricht Treaty, an agreement between the EU leaders of the day that expressed the economic goals that aspiring member states would need to attain in order to adopt the common euro currency at the time of its introduction in 1999. The economic goals, "euro convergence criteria," were meant to control inflation and assure fiscal discipline in the new union of diverse member states, and were expressed in terms of debt, deficit, and 10-year bond yields
At the introduction of the Eurocurrency in 1999, there was the expectation that a "real" convergence of underlying country economies would follow. The hope was that the lower interest rates and capital flows into poorer countries would foster investment, and that true EU integration would evolve over the years, that improving productivity and competitiveness would result for each member state economy. The entire EU region as a whole was expected to benefit politically and economically.
The reality of the Eurozone has differed from expectations. The underlying cause of the European crisis is one of relative competitiveness between member states within Europe. What has evolved over the last 20 or so years is a natural divergence between the fundamentally weaker and stronger economies, particularly since the onset of the global financial crisis five years ago. The EU is in the process of de-converging by measures based on the realities of its diverse EU members, roughly divided now between "periphery" and "core" countries. The pro-EU political will is neither evident nor able to alter the process.
Political will rather than true convergence in competitiveness between member countries has kept the EU together. But the pro-EU political will required to finish the integration process has been lacking since the onset of the global financial crisis, leaving fiscal union, true banking union, and mutualized debt undone, or left to debate.
The current lack of pro-EU political will has resulted in EU policies that seem neither to measure nor support full EU integration. In fact, the opposite seems true: Exacerbated by the EU policy prescriptions of austerity and cost-containment required by the Maastricht Treaty, member states are in the process of what I have referred to as "dis-integration," a stagnation or even reversal of the integration process in important ways that are not measured by Maastricht Treaty "convergence criteria." The current trends in the EU are that member states are diverging economically, politically, and socially in measurable and immeasurable ways.
Yet the global era is one of regional political and economic blocs. As the Ukrainian crisis highlights, the EU is a political bloc. The future of the EU and the Eurozone are inextricably linked and both are certain to enlarge for political reasons in spite of their political and economic problems. While joining is difficult, leaving is virtually impossible.
For the 2014, the current fear is not that the Eurozone will "break apart" or lose members, but whether the EU member countries have "dis-integrated," de-converging to a degree that even a renewal of pro-EU political will, if it did emerge from the EU parliamentary elections, could not mend.
End Part 1 (Part 2 will be released May 19 in anticipation of the EU Parliamentary Elections to be held May 22 through May 25).