The conflict over the €86bn rescue package has revealed deep rifts within Europe. From Helsinki to Rome, and from Dublin to Warsaw, national leaders are trying to placate angry backbenchers and distrustful publics. Attitudes and opinions that once belonged to the extremist fringe are seeping into the mainstream. An unravelling of Europe has never looked so likely.
For its most vociferous detractors, Europe’s original sin was integration itself. The EU, they charge, is a centralising superstate that has emasculated national sovereignty, subjugated market forces, levelled cultural difference, destroyed social solidarity, and let in people who are not from here. [...]
This critique unites populists of the right and left across Europe. They are cheered on by American libertarians. It is, however, a fantasy. Integration is not the cause of Europe’s problems, but a noble attempt to overcome them, which has sometimes met spectacular success. It has buried ancient enmities, preventing the return of war. It has dismantled barriers to trade, creating wealth. It has removed borders, enhancing freedom. It has made Europeans engage with each other, broadening their understanding of the world. Above all, it mitigated power differences by giving smaller, weaker states a disproportionate say in the union’s affairs, with a less-than-proportional say for larger and stronger states, most importantly Germany.
Globalisation has pushed European growth and influence to undreamt-of heights. Yet these very forces are also tearing at our communities, at our social contracts and at the nation-state.
Monetary union and the euro brought more wealth — above all to Germany. But given the EU’s incomplete system of economic governance, it also exposes public finances to market fluctuations, hampers economic recovery and exacerbates social disparities. Meanwhile, the geopolitical forces battering at Europe’s doors — a surging China, an increasingly assertive Russia — have made the continent’s large states smaller, and its small states feel powerless. Fear and confusion are eroding European solidarity, and reviving nationalism. And a stronger Germany finds itself thrust into the limelight of an undesired leadership role.
Europe also needs an immigration policy. Given its dire demographics, the continent ought to be grateful for refugees
This is the question before Europe. How much integration is needed to make its societies and institutions more resilient? Two models are on offer: muddling through, and a leap forward.
The first is the method favoured by Angela Merkel, Germany’s chancellor; it got Greece its third bailout, over massive resistance from half of Europe and from her finance minister Wolfgang Schäuble. But the procrastination, half-baked compromises and short-termism that are its hallmarks have worsened the divisions in Europe.
Time, then, to embrace the second option: fiscal and economic union, at least for the eurozone. The quid pro quo will be structural reforms and responsible budget policies, to reassure Germany, the Nordics, the Netherlands and eastern Europe. In return, France and the southern Europeans should have their wish of debt mutualisation, solidarity and stimulus.
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Last, Germany. Europe’s most powerful economy has taken on a lot of responsibility, from holding together the consensus on sanctions against Russia to backstopping bailouts. Yet it has done so with bad grace, and no discernible sense that anything bigger than Berlin’s commercial interests are at stake. Perfecting the EU on terms acceptable to all Europeans is Germany’s task. It will define Ms Merkel’s legacy.
© Financial Times
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