One justifiable source of pride amongst Europeans is the European Union. As far as I know it is unprecedented in history to have voluntary integration and power-sharing on this scale. It represents a triumph of trust and cooperation over suspicion and conflict. This worked because it was done in a slow, organic way so that an appreciation of the actual benefits of previous integration fed back into support for further integration. These benefits lead to the trust required to sacrifice more power and independence to promote further integration. Countries queued up to join. The requirement to overhaul their institutions, laws and processes in order to qualify provided major benefits even before they joined. All this is remarkable when you consider Europe's uniquely dreadful history of war.
Unfortunately this achievement is now threatened by the disastrous consequence of monetary union. The design flaws of the Eurozone have severely damaged hard-earned trust between Eurozone countries. Unless it is radically redesigned or abandoned it likely to destroy the European Union.
This is tragic and ironic. Tragic because it threatens to discredit the voluntary power sharing and cooperation that is the triumphant achievement of the European Union. Ironic because the architects of the single currency fervently believed that monetary union would promote the great EU project. They were warned by many that a single currency would have catastrophic effects, unless there was simultaneous fiscal integration to ensure that the hardships we are now witnessing were prevented. They nevertheless pressed on. Perhaps they hoped that when these flaws became apparent they would be resolved by further integration. If so, that was a monumental miscalculation.
When the global financial crisis hit Europe the 'northern European' remedy of austerity was initially tolerated. Some apparently believed that this would solve the problem, despite being warned from multiple quarters that it would make matters worse. Others, who saw the flaws of the austerity solution, hoped that after some austerity and structural reform northern Europeans would sanction policies that relieved their misery. This has not happened. Austerity has been a dismal failure. Greece's economy has collapsed and Spain is collapsing - they are experiencing conditions worse than the Great Depression at its worst. Despite this the 'austerians' press grimly on, insisting on austerity in all countries with deficits, even those in recession. This is suicidal and other countries are finally beginning to appreciate this. France is about to elect a government that rejects austerity. They will find that they have many supporters. The fate of the EU depends on how northern Europeans respond. One of their number, the Netherlands, have already withdrawn their support for austerity, leaving the remainder, led by Germany, increasingly isolated. Will they overcome their deep fear of inflation and demonstrate some flexibility, perhaps allowing the European Central Bank to create money to fund a fiscal expansion? Or will they insist on sticking to the Eurozone rules? If they choose the latter then the deeply flawed Eurozone is doomed. And it is likely to take the EU with it. The only participant with the power to stop this tragedy unfolding is Germany. Hopefully their powerful and enduring commitment to the European Union will help them overcome their fear of the actions required to save the Eurozone.
Unfortunately this achievement is now threatened by the disastrous consequence of monetary union. The design flaws of the Eurozone have severely damaged hard-earned trust between Eurozone countries. Unless it is radically redesigned or abandoned it likely to destroy the European Union.
This is tragic and ironic. Tragic because it threatens to discredit the voluntary power sharing and cooperation that is the triumphant achievement of the European Union. Ironic because the architects of the single currency fervently believed that monetary union would promote the great EU project. They were warned by many that a single currency would have catastrophic effects, unless there was simultaneous fiscal integration to ensure that the hardships we are now witnessing were prevented. They nevertheless pressed on. Perhaps they hoped that when these flaws became apparent they would be resolved by further integration. If so, that was a monumental miscalculation.
When the global financial crisis hit Europe the 'northern European' remedy of austerity was initially tolerated. Some apparently believed that this would solve the problem, despite being warned from multiple quarters that it would make matters worse. Others, who saw the flaws of the austerity solution, hoped that after some austerity and structural reform northern Europeans would sanction policies that relieved their misery. This has not happened. Austerity has been a dismal failure. Greece's economy has collapsed and Spain is collapsing - they are experiencing conditions worse than the Great Depression at its worst. Despite this the 'austerians' press grimly on, insisting on austerity in all countries with deficits, even those in recession. This is suicidal and other countries are finally beginning to appreciate this. France is about to elect a government that rejects austerity. They will find that they have many supporters. The fate of the EU depends on how northern Europeans respond. One of their number, the Netherlands, have already withdrawn their support for austerity, leaving the remainder, led by Germany, increasingly isolated. Will they overcome their deep fear of inflation and demonstrate some flexibility, perhaps allowing the European Central Bank to create money to fund a fiscal expansion? Or will they insist on sticking to the Eurozone rules? If they choose the latter then the deeply flawed Eurozone is doomed. And it is likely to take the EU with it. The only participant with the power to stop this tragedy unfolding is Germany. Hopefully their powerful and enduring commitment to the European Union will help them overcome their fear of the actions required to save the Eurozone.
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