Instead of bringing Europe closer together, the euro is driving us apart
The euro is now in a persistent vegetative state but the leaders of Europe, like distraught relatives, refuse to accept the depressing reality.
Serial crisis meetings between French President Nicolas Sarkozy and German Chancellor Angela Merkel issue little more than vague hopes of a resolution and whispers of stronger economic governance.
The perils of utopianism have been exposed.
The common market had established freedom of movement for people, capital, goods and services. It had created the biggest single market on the planet, and the increased choice and competition had been a blessing.
But as Voltaire warned, the perfect is the enemy of the good. The lovers of grand designs had deemed the EU incomplete for lack of a common currency. The pursuit of perfection, however, has had the effect of destroying everything that was once good about Europe. The idea had a certain naïve appeal, of course. By using the same coins and banknotes, former enemies would become natural business partners, old rivalries would disappear and hasten acceptance of a new pan-European identity.
Looking back, the introduction of the euro was the moment when the good magic of European integration turned evil. Its forces could no longer be controlled by Europe’s political class; their old spells no longer worked against the spirits they had called.
Today, instead of bringing Europe’s peoples closer together, the struggling euro is pitting one country against another and driving them further apart. Where Europe’s elite had hoped for harmony, they received confrontation. Where they had banked on economic benefits, they had to establish rescue mechanisms.
Where they had finally wanted to bury old nationalisms, they had raised them from their graves. And in doing all of this, they lost touch with the people they were supposed to represent.
Einstein once defined insanity as, “doing the same thing over and over again and expecting different results”. He must have had the EU in mind. Bailing out one country after the other, Europe’s leaders never tire to claim that this last bailout, this last emergency summit, this last rescue mechanism will finally solve the crisis once and for all.
And then, two weeks later, they are meeting again to proclaim exactly the same after another emergency round. The motto of Europe’s crisis management is always “This time is different”.
Clearly, in the Einsteinian sense, European politicians are insane.
They are unwilling to learn the lessons of their dilettantism because that would require admitting previous failures. There is a general European unwillingness to accept criticism.
Nothing that deviates from the EU’s own narrative about the inevitability of ever-closer union is allowed to spoil the party.
The truth is, after two years of ineffective crisis management, the euro is terminally damaged. Europe’s common currency is dying a death of a thousand cuts.
In this climate, the resignation of a mere “official”, as the Government here was anxious to portray him, takes on enormous significance when that official is the European Central Bank’s chief economist. Jurgen Stark’s warning that sentiment could suddenly turn against Ireland all over again deserves to be taken seriously.
Slowing growth across the continent, increasing opposition to bailout packages, and rising resistance to austerity measures, not least here in Ireland, show the euro is in its endgame.
The next shock could be fatal to monetary union. It wasn’t supposed to be like this.
From its inception, the EU was an elitist managerial project that was able to construct and promote its agenda without having to respond directly to popular pressure. Decisions are never arrived at through public debate, and the majority of EU laws are formulated by the hundreds of secret working groups set up by the Council of the EU. Most of the sessions of the Council of Ministers are held in private, and the EU’s unelected European Commission has the sole right to put forward legislation.
The most distinctive feature of the EU’s governance is that it is systematically pursued through insulated decision-making. For decades the EU political establishment has self-consciously constructed institutions that could insulate it from the necessity of having to respond to the type of public pressure faced by a democratic parliament.
This invisible decision-making allowed a variety of political actors in Brussels, and in Europe’s national capitals, to avoid taking responsibility for unpopular decisions. In effect, policymakers were insulated from having to account for the consequences of their decisions.
This ongoing assault on the basic rules of liberal democracy has been the defining feature of the euro crisis. The measures taken to salvage the wreck of monetary union are so inexplicable and unaffordable that the political class introduces them by stealth.
In effect, politicians could continually hide behind the EU’s invisible decision-making process and claim that such and such a policy ‘wasn’t my idea’, before adding that ‘unfortunately we have no choice but to go along with this Europe-wide directive’.
Insulated decision-making may work as an administrative convenience, but it also inevitably diminishes the capacity of European politicians to motivate and inspire their electorate.
THE treaty to establish the new European Stability Mechanism is the best example of this fundamentally undemocratic approach. Article 27 of the ESM Treaty grants the institution “immunity from every form of judicial process”. It also notes that the “property, funding and assets of the ESM shall, wherever located and by whomsoever held, be immune from search, requisition, confiscation, expropriation or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action”. ESM archives, documents and premises are deemed “inviolable”.
The institution will be exempt from any rules that normally govern financial institutions, including taxes. On top of that, all ESM governors and staff will enjoy full legal immunity and its employees will be freed from national income taxes. Finally, Article 42 gives member states a deadline until December 31, 2011 to ratify it.
For a new legal framework with enormous financial and fiscal consequences this leaves little time for detailed national debates. But that is precisely the point. European governments do not have the slightest interest in a thorough debate about the introduction of the ESM. With the planned extension of the European Financial Stability Facility and the introduction of its European Stability Mechanism successor, the German government had planned to sideline parliament in future euro rescue efforts. Now, the remaining options to buy it more time have been blocked by the German constitutional court.
That the euro survived until today was mainly due to the Germans providing life-support to the sick currency. Everybody knows that the current period of muddling through the euro’s blatant contradictions cannot go on for much longer. Once the Germans withdraw their seemingly open-ended commitment – and that is a matter of when, not if — the euro in its current form, and with its current membership, the euro will be history.
And for the European Union, the end of the euro would be synonymous with the failure of its project of ever-closer union.
