Friday, July 13, 2012

In Times of Crisis, Europe and the Euro Need a Visionary

It has become all the more apparent after every EU summit since the beginning of the Eurozone crisis in early 2010, of which there have been almost two dozen, to sit back and wait a day or two for the clear picture to unravel. After the slapping on the backs by ministers for a job well done, a communiqué to the media about finally placing the Euro on a stable, stronger path, the markets either jump suddenly or more likely shrug at the results. Then they fall. The failures become apparent and a sadly predictive chain of events occur; the Euro slides, bond yields spread and the chancelleries of Europe fret, bicker and point fingers at each other. This then necessitates another sit-down around the table in Brussels for another supposed make or break deal to save the Euro. It would be almost comical if the stakes were not so high.

The reasons for this continuous macabre dance on the edge of an economic precipice by European leaders are multitude. To the critics of the whole Euro project it is a state of denial of the fact that the whole single currency is doomed and has been since its inception. Others argue that the causes of the crisis are diverse. This is not just a Eurocentric crisis in their opinion and is the result of a systemic failure of an Anglo-Saxon hyper-capitalism that has prevailed internationally for decades and intentionally or not has sucked in many European countries.

However a substantial amount of the blame for the failures of the past two and a half years has to be placed at the feet of the current crop of European leaders. A lot of them have of course inherited this ticking time bomb, even more so since the economic turmoil turfed out previous governments, leaving them an unholy mess to sort out. One can understand why many politicians today feel bitter and unwilling to take on this Herculean task, let alone be asked to shoulder even more financial burden or to rescind aspects of sovereignty to save the Euro. It is certainly the greatest crisis to hit Europe since World War II but not its first crisis and they all had been overcome. There are signs that this crisis, with a good bit of sacrifice and effort is just as surmountable. What Europe lacks is a strong, credible politician or politicians with a strength and vision take it on.

Modern Europe and the European Union has been driven for the last sixty years by politicians with a drive: a strong, concrete albeit at times idealistic vision that provided the élan to overcome obstacles, crises and furthered prosperity. Robert Schuman was of course one of the first but also in time came such individuals as Helmut Kohl and Jacques Delors, the latter considered one of the founders of the Euro. To some the vision that they extol may be flawed but one is unable to deny the strong determination and leadership they extolled. In a Europe made up of an uneven patchwork of nations this has been vital. To Lindberg and Scheingold, academics of European integration in the 70’s “leadership is the very essence of a capacity for collective action”. Others went further, such as Ernst Haas saying: “In the absence of the statesman who can weld disparate publics together with the force of his vision, his commitment and his physical power, we have no alternative but to resort to gradualism, to indirection”.

Today, that lack of strong leadership has led to the gradualism and indirection Haas feared but the effects have resulted in a Europe unable to overcome strong recessionary tendencies, thus aggravating the situation markedly. There is no doubt that the single currency is flawed. Indeed Jacques Delors, considered one of the fathers of the single currency stated recently that there was a “fault in execution” of the Euro. There is merit to his statement when one sees the failure of some of its vital pillars such a rigid enforcement of the Growth and Stability Pact. The problem has been further exacerbated by the single currency, creating a significant divergence between the various members, something that was not fully considered twenty years ago. Rather than bringing the member countries closer together economically, they have somewhat drifted apart in terms of competitiveness between one another and production has similarly diverged. This divergence has also created one between individual domestic priorities. There is now a major crisis of countries in serious debt in need of money while others are in surplus, showing a strong unwillingness to hand over some cash to help them, whether it is right or wrong. Domestic issues are more paramount than before. Now the issue of saving the single currency bows down to the question of whether it is better to be in than out and everyone else be damned rather than actually fixing it.

This strong reluctance on the part of the leaders of member governments has created a vacuum for other political actors in Europe to make a stand. The leader of the European Central Bank Mario Draghi has emphasized the necessity of a “roadmap”, essentially a pathway to further economic and political integration with stronger oversight of economic policies in member countries by European institutions, new and existing. This idea has been taken up by Jose Manuel Barroso and Herman von Rompuy the leader of the European Commission and President of the European Council respectively, who have advocated for programmes such as a banking union to tackle banking failures in all member countries. However none of them have the determination or expertise to overcome the massive differences and conflicting agendas of member countries that people like Jacques Delors or Francois Mitterrand seemed to imbue. Each has been closely guarding their interests and position without making the strong, unequivocal sacrifices that people like Delors, not to mention domestic actors such as Kohl and Mitterrand did twenty years ago in making the unprecedented rescinding of monetary control to create the Euro.

Maybe the stars are not aligned for a visionary right now. People of vision are not manufactured for the sake of a cause but either rise-up out of the blue or are animated by circumstances to stand up. However for Europe to succeed, for the Euro to survive or at the very least learn to live off the drip it has been on for over two years, someone of the stature of a Kohl, willing to take the risk to take the European project to the next level. One vital ingredient lacking with today’s politicians, that drove the Mitterrands and Kohls of the past was the danger discord among Europeans of the past manifesting again. Both had experiences of World War II. To them the sacrifices, at times for some more than others in pursuit of the “ever closer union” far outweighed the other options. European politicians today need to consider that too. A new breed of political visionaries are needed to finally and irrefutably solve the Euro crisis and bring Europe to the next level.

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