Special Reports
 
 


A VICTIM OF ITS OWN SUCCESS

by

Martin Woollacott
________________
  

   

 
A Victim of its Own Success
Has the European idea lost its potency? The question is unavoidable as one looks at the Europe of today, wracked by economic crisis, institutionally confused, divided in its counsels, and in danger of reverting to the principle that narrowly conceived national interest should be the main guide to action. The original European impetus was not only the negative one of avoiding war. It also sprang from a realisation on the part of the main European powers that their decline was inevitable unless they joined together. Economically, militarily, and diplomatically they could count for far more in the world if they acted in some respects as a collective. Of course, national interest and European interest would in practice be entangled. French leaders invoked Europe to sustain French objectives, while Timothy Garton Ash called his history of post-war Germany "In Europe's Name," to describe the way in which German ambitions were always represented, as well as sometimes genuinely modified, to fit a European template. Even the sceptical British were on occasion ready to see Europe as a multiplier. Yet, while Europe often faltered, it neverthless moved on from success to success.

It is now in a sense the victim of those successes. The problems which the European movement solved lie in the past. The great gains from the progressive dismantling of economic barriers are but a memory, and it is the disadvantages of economic union, not the advantages, that are now at the forefront of people's minds. Politically it is the same story. Franco-German hostility was long ago interred. The rehabilitation of southern European regimes which had been fascist or authoritarian, or both, is an old story. Membership of what became the union capped and confirmed that process, although the state of Italian politics reminds us that no story is ever quite over. The transformation of Ireland from a trapped satellite of Britain into a country enjoying broader horizons, and the ending of Sweden's isolation are two more examples of the way in which Europe provided a solution to national dilemmas. Britain's membership had earlier given the country a European role, even though it did not end the British reliance on the special relationship with the United States. Then there was the incorporation into the union of nearly all of the states which had been under Soviet sway, ending a division of the continent which most Europeans had believed would never be reversed. Expansion to the north, south, west, and finally east brought us the Europe of the 27 in a series of triumphs that could not have even begun to be imagined when the community was founded.

But now it seems that Europe is a multiplier not of strengths but of weaknesses. At the national level, the growth and welfare model which has served as a guide and ideal for European societies is in deeper trouble than it has ever been before. That ever increasing economic growth, funding its own continuation and providing generously for the less fortunate as well as for a range of other public goods, could no longer be depended on, was evident well before the banking crisis. Indeed, it was precisely because welfare states were being more and more funded from loans and not from the current proceeds of growth that the conditions conducive to a near collapse of banking and finance were created. European politicians, for so long used to explaining to their electorates that the long term future was one in which people would become progressively better and better off, now have to explain that the medium term future is one which a majority of citizens will become poorer. But the banking crisis meant that this shift came very suddenly. In Britain, the move from big spending New Labour, pouring out millions to "fix" health, policing, and other social services; and the austerity coalition, frantically clawing those millions back, is very marked. There were even more traumatic transitions in countries like Greece, Spain, the Baltic states, and Ireland. France and Germany are attempting a softer version of austerity but their electorates, too, have a profound sense that their horizons are narrowing.

Even when, or if, the economic crisis is contained, the prosperity of the past may not be recoverable. The growth-welfare model was dubious on other grounds: socially, because it led to welfare dependency and to the creation of a class not sufficiently educated or stable to participate fully either economically or politically, and ecologically, because of its impact on the environment, although much of that impact was not felt in Europe itself because of the transfer of dirtier industries to other parts of the globe. It was especially dubious in countries, like Britain, which had lost much of their manufacturing base and were reliant on finance and other service industries, Ireland where local banks were hugely over extended, or Spain, where madcap property development had distorted the economy. Europeans are consequently in a divided state of mind. On the one hand they are resentful of politicians who promised that ever more prosperous future and now cannot deliver it, as well as entertaining vengeful feelings toward the bankers and financiers who precipitated the global economic crisis. On the other, they had already suspected that the model was not sustainable. As the British M.P Chris Mullin said on standing down from parliament recently, we surely could not for much longer base our economy on shopping

The effect on national politics has been quite startling. Everywhere incumbent parties have suffered. Gordon Brown went down in Britain. Nicolas Sarkozy, already unpopular, has tumbled even further in the polls, while Angela Merkel, who had once been seen as a steady hand, also found herself with her back to the wall. Mrs Merkel barely scraped a narrow victory for her preferred candidate in the recent vote for the country's president. When Europeans had the opportunity to vote the results were odd, or even bizarre. British voters were briefly infatuated with a little known leader, Nicholas Clegg, and a minority party, the Liberal Democrats, sending them soaring in the polls, only to cool on them before the vote as rapidly as they had warmed. Belgium, which, it should be remembered, is one of the original Six and the homeland of Paul-Henri Spaak, a founding father of the European Union, split its vote in recent elections between a Flemish separatist party and a left wing Francophone party, about as far removed from a recipe for unity, national or European, as can be imagined. Dutch voters meanwhile elevated an anti-Muslim party to third place in their polls. In Spain, Jose Luis Rodriguez Zapatero, a charismatic figure who has won two general election victories, faces calls for an early vote which this time he would certainly lose, if the polls are any guide. There have been many periods of political volatility in Europe in the past, but these are all on the high end of the scale.

This generalised crisis at the national level is dangerous for the European project. That project was from the beginning about security -- economic security, in the sense that gradual unification was to deliver benefits that national economies could not deliver on their own; internal security, in the sense of preventing any serious conflict among members; and external security, in presenting a common front toward the Soviet Union and, to a much lesser extent, toward the United States. But, insofar as European unity was a form of globalisation, it contributed toward the economic crisis rather than protecting the union from it.

Internally, while war between members of the union remained a fantastical idea, conflict did not. Externally, the common front was eroding rather than being strengthened. Member states like Germany did their own deals with Russia. All competed as rivals in bidding for Chinese trade, and found it hard to achieve common positions in international trade and environmental negotiations. The economic penetration of Europe had once been seen as concerning mainly American corporations, and, later, aggressive Japanese exporters and investors. The new scene had China moving in on Greece and Ireland, while Gulf states came to the rescue of British banks. The question of ‘Who owns Europe’ (outside of Germany, and, perhaps, France) could in time become critical.

If the European Union had reacted in a co-ordinated and effective way to the crisis, it might be in better shape. But while some of what has been done has been shrewd and helped avert the worst in the first dangerous months, there were foolish delays in dealing with the Greek problem, and there is not much sense of strategic coherence. There is some identity of view, with European countries generally choosing to emphasise austerity rather than stimulus, and in this differing from the Americans, but a common fear of the bond markets is not a substitute for a worked out collective policy.

Above all, the economic crisis destabilised the Euro and in doing so exposed the fault line separating Germany from the rest, including France. Germany is the most successful country in Europe, but it is also now the most isolated. Germans see their economy, with some reason, as created by their own hard work, technical skills, and relative prudence; that its benefits should now be disbursed to less hard working, less skilled, and less prudent states is very hard to accept. It seems to Germans equally preposterous that they should be asked to increase consumer spending at a time when they prefer to save, or to take in more imports and send out less exports, in order to "redress the economic balance" -- even if there were policy tools which could be used to bring about such changes, which is seriously doubtful.

All this comes out at the European institutional level in a constant manoeuvring between France and Germany about the economic governance of the Union, which both in principle now agree is necessary, and about the committees, departments, and personnel involved. The Germans want instruments to keep inflation down and impose fiscal discipline, no more bail-outs, and no pressure on Germany to change its economic style. The French want measures to promote growth and, more generally, to have more levers to pull that will involve Germany automatically in whatever is collectively decided. The Germans want any new committee to be of all 27 members, France wants it restricted to the Eurozone. France wants a secretariat, Germany does not. It is clear that there is no meeting of minds behind a superficial agreement on vocabulary .

It was already the case that Sarkozy and Merkel disliked one another. But these personal difficulties, and even the economic crisis itself, may be less important than a generational change in Germany which many observers have noted. Decades of deference to the European idea, with an associated readiness to pay a larger share of the costs, are giving way to a Germany ready to bluntly put its own interests first. The result is that the Franco-German relationship, which has been the reliable motor of the European Union for as long as most people alive now can remember, is not what it was. The informal politics of the Union used to often consist of a sequence that began with a Franco-German agreement reached bilaterally, then moved on to a Franco-German proposal put to a wider circle of member states, then to larger discussions during which objectors and doubters were appeased, or offered compromises. This is now changing and nobody knows in what direction.

The situation is made more complicated by the fact that the formal politics of the Union have been changed at the same time as these informal changes are reshaping the European scene. The creation of the new posts of President of the European Council and High Representative for Foreign Affairs were intended to make European institutions more efficient. But in practice they have led to a struggle between the players about responsibilities and powers. Jose Manuel Barroso, the Commission President, Herman Van Rompuy, the Council President, and Catherine Ashton, the High Representative, are still staking out territory. There was already criticism that none of these three figures had the weight necessary for their jobs. This may be unfair, especially in Ashton's case. But what is true is that the last thing which the Union needed at this moment, was a bout of bureaucratic infighting.

A European foreign policy based on the continent's aid record, its capacity for conflict resolution, its formidable collective profile in trade, and a more active approach to the Middle East and North Africa would be one way in which Europe could emerge from its present confusion about its purposes and its future. But Europe is not setting the pace in any area, leading one commentator recently to ask whether the continent wanted to " resign from history." Not yet, perhaps. But the combination of weakness at the national base, unsettling change at the informal Franco-German level of European politics, and uncertainties in the EU's formal institutions, is not helping Europe at a dangerous time.