Geopolitical reality tends to change far more slowly than perceptions of it. To take a geophysical analogy: Underlying trends are like plate tectonics, slow to develop but irresistible over time; perceptions are like the weather, sometimes dramatic, often unpredictable and hardly irrelevant, but of lesser impact all the same. Perceptions of Europe have shifted markedly
in just the past few years. Where once stood an attractive post-nationalist model of peace, prosperity, social justice and ecological virtue now stumbles a larger but seemingly aimless and far more ungainly project. Europe today seems apathetic about its achievements, confused about its future and largely ignored by those not directly affected by it. Thanks to the financial crisis and its meandering aftermath, Europe’s problems and limits seem lately to have accumulated into a genuine crisis. To understand how read Walter Russell Mead brilliant April 27 post on the economic origins of the “Greek” dimension of the crisis.

But is it really a major crisis we hear thundering toward us, or just the cacophony of nervous nellies? Is the promise of the once-vaunted European model now revealed as just a passing breeze, or is it our current dour attitudes that will dissipate once the economy stabilizes? The American Interest put the question to eight observers, four European and four American, for our July/August issue.

Why does the world today no longer see Europe as a model, as it seemed to do only a few years ago? It’s simple: The world can’t be expected to believe in a European model that Europeans don’t seem to believe in themselves.

What is the “European model?” It seems to consist of some combination of managed markets, state-dominated social welfare nets, political integration, economic union, state industrialism, and social postmodernism (including a heavy dose of secularism), yet with a high degree of moralism in the protection of human rights, civil liberties and the environment. At its peak, the global image of Europe was that of a peaceful, stable, prosperous and integrated political-economic space—a magnet for others that guaranteed a high quality of life and buffered its citizens against the worst effects of free-wheeling capitalism. The appeal of this model was manifested in the expansion of the European Union, whose accession process led country after country to endure painful reforms in order to become members of the club.

But what do we see in Europe today? Challenges across the board: economic, political, ideological, security.

On the economic side, the European model has proven not to be immune to the effects of the global financial crisis, and indeed has demonstrated its own self-generated unsustainability. While Europeans may still blame American “wild-west” capitalism for causing the crisis, the fact is that European banks were as leveraged or more so than American banks, and state budgets were as laden with deficits and debt as America’s, if not more so. More important, European financial woes are ultimately due more to underlying structural problems than they are to the ripple effects of the global financial crisis: an aging and declining population, unintegrated immigrant populations, expensive employer taxes and high social welfare costs.

Under the strain of the financial crisis, efforts to sustain the European social model have put enormous pressure on state budgets throughout the Union, but especially in Greece, Spain, Portugal, Latvia and Ireland. These fiscal imbalances have in turn put pressure on the monetary union—the Eurozone—leading to the need for a bailout of one country, preemptive measures to prevent bailouts in others, and German insistence on an expulsion clause if countries fail to meet their obligations in the future.

The economic strains in turn have put pressure on political solidarity within Europe, evidenced precisely by Germany’s call for an expulsion clause. But even before the Euro-crisis there were signs of political strain. While the Lisbon Treaty was supposed to usher in an era of closer European political integration, in reality the big nations of Europe, led by Germany, have been emphasizing national interests over European ones on a range of issues: energy security; protection of key national industries; economic stimulus in major economies; immigration from Central and Eastern Europe (the “Polish plumber” issue); fear of further enlargement; and the selection of relatively unknown leaders for the European Union under the Lisbon Treaty. The Greek crisis exacerbated existing strains; it did not create them.

These economic and political trends coincide with what outsiders might see as a lack of ideological confidence—a European belief in the relativism of values and interests rather than a steadfast insistence on the universal validity of freedom, democracy, market economy and rule of law. It is more common to hear European politicians today say they cannot “impose” democracy and “Western values” than to hear them speak of “democracy promotion” and “universal values.” One of the few major European politicians to espouse a values-based vision for the world has been Tony Blair, who has suffered an unseemly repudiation within the United Kingdom.

It can even be argued that one can see this lack of ideological confidence in Europe’s unwillingness to invest in its own security. Whether it is defense budgets, troop deployments, Georgian territorial integrity, missile defense, Iran’s nuclear program, efforts in Afghanistan, or counter-terrorist intelligence and data cooperation at home, Europe is seen by those with revisionist agendas—great powers, rogue states and terrorists alike—as a reluctant partner in tackling its own security challenges rather than a self-motivated activist. As one NATO military leader famously quipped, “NATO couldn’t take its own side in a fight.”

Against this European malaise, China’s authoritarian capitalism is seen in some quarters of the globe as extremely successful. It has rebounded more quickly than others from the financial crisis, and it has continued to position China as America’s banker and the world’s source of cheap goods and capital. And religious populations, especially Muslims, seem to find religious fundamentalism more appealing than Europe’s postmodern secularism, which they equate with moral decay.

All these factors point to a Europe that is down, but it is too early to count it out. Just as Winston Churchill said of democracy—that it is the worst system of governance, except for all the others—no model besides market democracy has the capacity for sustainability, self-correction, innovation and wealth-creation, and no other model delivers individual freedom, choice of governance and social justice. It will not be long before that model, led by an American recovery, again reasserts itself as the most compelling driver of wealth and human well-being on the planet.

As it does, the challenge for Europe will be to determine how much of its expensive social welfare system can be maintained. This, however, is a problem of riches. Seen against the larger global canvas—market democracy versus some other political economic system—it is also somewhat beside the point. Overall, the economic and political dynamism, as well as the quality of life, generated by the market democracies will once again make them not the sole model of global appeal, but the model of models. For some time to come, the Transatlantic economy and democratic community—that is, America and Europe together—will remain the big kids on the block, whether in terms of sheer economic size, trade, investment, media, political influence, moral suasion or military capacity.