The not-so-certain death of Europe

europeonthestrand |

By Pablo Calderon Martinez

The French public’s uproar and subsequent social mobilization that followed Sarkozy’s proposal to raise the retirement age from 60 to 62 and last September’s general strike in Spain are evidence of far more than the deep-rooted French tradition of influencing governments by taking to the streets, or the Spanish dissatisfaction with a government that has run its natural course; they were the latest stage of a Europe-wide debate dividing Europeans between those advocating for greater financial responsibility and those unwilling to sacrifice the welfare state to achieve it.

The financial crisis shook Europe at many levels; it hit the so-called PIGS (Portugal, Ireland, Greece and Spain) particularly hard and even the most pro-European countries have seriously questioned the wisdom behind the EMU. Whether or not the single currency is in real danger of collapsing (as the Conservative British media is only too happy to proclaim; Ambrose Evans-Pritchard blog for the Daily Telegraph is a good example is, in the broader sense, a subplot of the European drama. Herman van Rompuy’s warning that the end of the Eurozone would mean the end of the European project may be true, however it is hard to say if this was really a concern for the President of the European Council, or if it was a calculated comment aimed at spreading a sense of urgency among the EU member states. What is true is that the European Union needs to re-emerge from the lethargy it has fallen into following the failure of the Constitutional Treaty. The EU should regard recent events not only as a challenge to its very existence but also as an opportunity to kick-start a mid-eighties-like renaissance.

Under the leadership of Jacques Delors the process of European integration was given much needed impulse; the Single European Act completely revitalized the stagnant EC of the 1970s and early 1980s. The decade preceding the SEA was characterised by bitter confrontations over southern expansion (in particular French concerns over the impact Spain would have on agriculture) and concerns over contributions to the budget. As it has been from the outset, Europe found the answer to the questions posed in the 70s and 80s in further integration. Clearly the effects the financial crisis has had on the EMU represent a completely different set of challenges to those Europe faced in the 1980s (or indeed at any other point in the history of its integration).

Now would be a good time to remember that the principles and reasoning behind European integration have always been political; the politics of integration have trumped the economics of integration from the very beginning. It is true that launching a single currency without a unified economic policy was an economic risk, but it was a risk taken with political gains in mind. The main idea was that a single currency would help bridge the gap in development between southern and northern Europe, and that the single currency would in turn lead the way for further economic integration. Although it is impossible to deny that there are still great differences between the German and the Spanish economies (to give an example), it is also hard to ignore that both countries have benefited considerably from the principle of solidarity at the core of the process of integration.

A widespread feeling is that Europe is waiting to find out where the weakest link is… who will get tired first, the Germans of bailing out the weaker economies or the weaker economies of loosing control over their own destinies? This, however, does not fully recognise the political nature of the Union. The Germans are unlikely to forget that the so-called weaker countries (Spain in particular) offered their support when they were seeking re-unification, the same way the Spaniards are not going to forget that easily that Germany (and Europe in general) offered a platform for dissent against the Franco dictatorship and supported Spain’s accession to the Union despite French concerns. It is this principle of solidarity and reciprocity that I believe keeps the sometimes dysfunctional wheels of Europe turning.

After all, the EU has gone through considerable trouble to make Europe more than an economic union. This may be hard to grasp from a typically British Euro-sceptic perspective, but the process of European integration has been, more often than not, characterised for its high costs as well as for its high rewards. The current situation of Ireland and Greece, and the ominous signs on the horizon for Spain and Portugal, will inflict considerable pain in their populations. The only question is whether the countries worst hit by the current crisis are still willing to pay the price for remaining a part of one of the most successful and captivating projects of economic and political integration in history. If we consider the role Europe played in the impressive development of some of these countries in the last 30 years (just in the period between 1994 to 1999 EU direct financial aid counted for 1.5% of Spanish GDP and over 3% of that of Portugal), I would not bet against them deciding they are better of inside a less than perfect Europe than out of it.