Things are getting bad in Europe, real bad, and the costs of European dithering are increasing. There has been plenty of excellent commentary about the crisis in Europe and the need for European political leaders to step up. (See Matt, Adam, and NSN's piece today). But to put this in a bit larger context, the current dithering is in no small measure due to the EU's failings over the last decade to consolidate and strengthen its political union, as well as to take adequate action to alleviate the "democratic deficit."
The first problem is that Europe enlarged without modernizing its decision-making structure. The failure to pass an EU constitution as it into Eastern Europe has hampered the EU's ability to make even simple decisions. Expansion has also meant that the Union is no longer dominated by a pro-European German-French alliance due to enlargement. Consequently, each has lost a feeling of ownership over the project -- as seen by the French rejection of the EU constitution in 2005 and current German dithering.
Yet at the same time Europe has failed to adequately enhance its political union, its economic union has intensified. Over the last few decades European countries have become enormously integrated with one another. The true scope of this integration is often under appreciated, but the economic, legal, and administrative fabrics of European countries are now incredibly intermeshed. In short, Europe has become a single market and has developed an elaborate bureaucracy and legal system to monitor and develop this system. But it has done so without a proper over-arching political structure to govern the system. This is all fine when the going is good and top-down political intervention in the economy is largely unnecessary. But when the going gets bad, this is real bad. As Stefan Kornelius, of the German newspaper Süddeutsche Zeitung, told the New York Times, "We always said you can't really have a currency union without a political union, and we don't have one. There is no joint fiscal policy, no joint tax policy, no joint policy on which industries to subsidize or not. And none of the leaders is strong enough to pull the others out of the mud."
The second problem -- and this is pretty massive -- is that Europeans in general don't understand the EU, don't understand its importance, and don't care that much about it. (If you ever get in a conversation with a European who rants about how ignorant Americans are about their politics, respond by asking them who is the EU commissioner for external relations? or enlargement? Don't be surprised to see a blank stare) And so at the moment when leaders need support from European publics to take bold action in support of the European project and the single market, public support in many countries has soured. Instead, nativist slogans like "British jobs, for British workers," and "buy Spanish" are making the rounds. As a result, few political leaders in Europe -- at a time when their popularity is sinking and many on the right and left are using the EU as a convenient scapegoat -- are willing to go to bat for the EU.
British EU-skeptic Gideon Rachman had an amazing column in the FT where he, after deriding the EU as the FT columnist from Brussels over the last decade, is now really worried that the liberal single market that is advanced by the EU is starting to unravel. He writes:
...Arguably, all my darkest suspicions about the European project are about to be vindicated. So it is an odd time to renounce euroscepticism. But it is precisely the threat to the EU that has focused my mind. Plans for a political union in Europe were always crazy. But the four freedoms already established by the EU -- free movement of goods, people, services and capital -- are huge and tangible achievements. It would be terrible to see them rolled back... If Europe starts rolling back the four freedoms, the implications will stretch well beyond economics. Protectionism and nationalism are close cousins. The principles of consultation, co-operation and open borders within the EU have helped to repress the old, nationalist demons.
In the coming years, the real threat to these freedoms will come from national governments in a panic -- not from the dreaded bureaucrats of Brussels. On the contrary, it will be up to an enfeebled European Commission to try to hold the line... Strangely enough, I now feel a certain protective warmth towards the embattled eurocrats in their Brussels skyscrapers. This would have been hard to imagine when I arrived in the city all those years ago. But it has finally happened. I love Big Brother.
The great irony here is that the thing Rachman has opposed -- EU bureaucracy and expanded EU federalism -- are now the things desperately needed to protect the thing he supports -- a liberal open economy.
So where the EU goes from here is anybody's guess. The worries of collapse are legitimate, but it is likely that the EU will pull together to do just enough to muddle through this crisis. If it is able to get through, the opportunity could be there for the EU to strengthen its political union. The Lisbon Treaty, which is not far from ratification, is no cure all,
but it would be an awful important step to improve Europe's ability to
act more decisively.
The late Civil War historian Shelby Foote had a great quote about the impact of the Civil War on the US: "it made us an is," he said. What he meant was that before the war people thought of the United States as a collection of states and would say "the United States are" a beautiful country. After the War it became "the United States is." While this crisis could never have the unifying and transformative impact that the Civil War had on the U.S., crises do expose shortcomings and create opportunities to address them. A silver lining perhaps.