Global Watch

The European Union, Nationalism and the Crisis of Europe

European flag not enough for unity
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The compromise reached between the European Central Bank (ECB) and Germany on implementing a programme of  "quantitative easing” has brought on a decisive moment for the survival of the European Union.

 In an article for Stratfor Global Intelligence George Friedman argues that in the compromise, aimed at solving Europe’s economic problems, “we can see not only the base of sand (on which the EU was built) dissolving but also the brotherhood of Europe falling apart. At the heart of this compromise is the idea that Germany will not share the fate of Greece, nor France the fate of Italy. In the end, these are different nations.

 The basis of the compromise is that in an attempt to spur economic activity in Europe by increasing the amount of money available. It calls for governments to increase their borrowing for various projects designed to increase growth and decrease unemployment.

 Rather than selling the bonds on the open market, a move that would trigger a rise in interest rates, the bonds are sold to the central banks of eurozone member states, which have the ability to print new money. The money is then sent to the treasury. With more money flowing through the system, recessions driven by a lack of capital are relieved. This is why the measure is called quantitative easing.

 Unlike in the US in 2008, where the Federal Reserve printed money and bought the cash, in the EU each country’s individual national bank will receive some of the ECB printed money and will only be allowed to buy the debt of its own government.

 “The reason for this decision reveals much about Europe's real crisis, which is not so much economic (although it is certainly economic) as it is political and social — and ultimately cultural and moral,” writes Friedman.

 This is done because many Eurozone governments are unable to pay their sovereign debt and they do not want to each other's shortfalls, either directly or by exposing the ECB to losses that would make all members liable. In particular, Berlin does not want to be in a position where a series of defaults could cripple Europe as a whole and therefore cripple Germany.

 The ECB is providing the mechanism for stimulating Europe's economy, while the EU member states will assume the responsibility applying the stimulation — and individually living with the consequences of failure.

 Fact is that while Germany and Greece are both part of the EU, they do not and will not share a common fate. If they do not share a common fate, then what exactly is the purpose of the EU?

 A Crisis of Brotherhood

 “Europe's crisis is not ultimately an economic one. Everyone — families and nations — has economic problems. The crisis is not war, which tragically is as common as poverty. Europe's problem is that it promised a joy beyond custom, a joy yielding brotherhood and abolishing war, and a promise based on prosperity, which is a promise so vast it is beyond anyone's hope to make perpetual,” writes Friedman.

 Neither perpetual peace nor perpetual prosperity can be guaranteed, therefore the

EU-“promise” of joy that would overcome custom and bind men in brotherhood is a base of sand he argues.

 At the heart of the problem is the fact that Germany will not share the fate of Greece, nor France the fate of Italy. In the end, these are different nations.

 Their customs can be overcome by the joy uniting them in brotherhood, but absent that joy, absent peace and prosperity, there is nothing binding them together.

 The question at the heart of the EU is: Can an entity, founded on nations of wildly different customs, expectations and economies long endure and share a common fate? In the dry technicalities of quantitative easing, Europe has defined its limits of brotherhood.

 “The strategy proposed for quantitative easing is a great compromise, and it may solve the economic problem. But at its first test, hardly on the order of slavery and the American Civil War, Europe has failed a more profound test: brotherhood, which is men bound together by a joy-transcending culture,” writes Friedman.

 Quantitative easing is not merely the desire to avoid responsibility for prosperity. There is no unity in Europe over the fears of Romania or Russia about Ukraine. There is no real unity over how to face terrorism in the name of Islam. “There is simply no unity.”

 “In the end, Europe becomes not so much a moral project as it does a convenience, a treaty, which is something a country can leave at will if it is in its interest to do so,” he writes

 Friedman’s conclusion:

 “I predicted that a decisive moment would arrive in Europe, but the speed at which it did surprised me. I expect that its institutions will survive a while, and I expect that most people will think I am overreacting. That's possible, but I don't think so.

 “Regardless of the technical and political purpose behind the decision to implement quantitative easing, and however defensible it is on its own grounds, the moral lesson is that Europe ultimately is a continent, not an idea.

 “Last week, the question was why Europe found it so difficult to assimilate immigrants and why it resorted to multiculturalism. The answer was that the customs of the nation-state made it impossible to imagine someone born outside the customs of the nation-state to truly become part of its brotherhood. This week, the question is why the ECB cannot distribute the money it prints but will give it to national banks to manage?

 “The answer is that no country wants to be responsible for the debts of anyone else in Europe. That is not a foolish position, but it makes a union impossible, certainly not one that can overcome custom.

 “In Flashpoints, I wrote the following:

 ‘We are now living through Europe's test. As all human institutions do, the EU is going through a time of intense problems, mostly economic for the moment. The EU was founded for peace and prosperity. If prosperity disappears, or disappears in some nations, what happens to peace? ...That is what this book is about. It is partly about the sense of European exceptionalism, the idea that they have solved the problems of peace and prosperity that the rest of the world has not.’

 “But if Europe is not exceptional and is in trouble, what comes next? The history of Europe should give us no comfort.”

                                                                                                                            edited by Piet Coetzer

(This is a summary of an article by George Friedman of Stratfor Global Intelligence. The full article is available here)

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