The American Interest
Policy, Politics & Culture
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Drifting and at Risk

For a host of reasons, the European project, one of the most impressive international achievements of the past fifty years, is in deep crisis. “Malaise”, a word made famous by President Jimmy Carter in the 1970s, now seems the most apt description of the European Union’s mood.

Published on July 1, 2010

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.

—The Editors

For a host of reasons, the European project, one of the most impressive international achievements of the past fifty years, is in deep crisis. “Malaise”, a word made famous by President Jimmy Carter in the late 1970s, now seems the most apt description of the European Union’s mood. In the United States, malaise gave way to “morning in America” under Ronald Reagan’s leadership. In Europe’s current situation, there are few reasons to believe that any comparable shift is likely.

The core of the European project’s success was economic. Beginning with the German Wirtschaftswunder in the late 1950s, the ability of European states to integrate was based on their collective ability to deliver jobs, affluence and a reliable social safety net to national publics. In particular, Europe’s success reflected a basic, strategic decision by successive German governments to pursue Germany’s national interests within the broader framework of Brussels-based institutions. This was an expensive strategy, but for Germany and the rest of Europe it largely worked.

The current financial crisis, however, has revealed some fundamental flaws in the European monetary system and the structure of its trade flows and investment more broadly. The threat of a sovereign default in Greece is only the tip of the iceberg: Over the next 12–24 months, the heavily indebted governments of Italy, Spain and Portugal are likely to face serious risks of default that could generate unprecedented economic and political strains within the European Union. On the one hand, lender governments, especially Germany, will come under heavy pressure to bail out these neighbors, both to preserve the Eurozone in its present scope and to head off further financial turmoil. On the other hand, as we have seen in the Greek crisis, Angela Merkel and other German politicians will be increasingly reluctant to support profligate governments and national welfare systems that are even more generous than Germany’s—witness the now-infamous Greek hairdressers who retired at the age of 52.

But the Greek crisis has revealed an even deeper economic and political conundrum: The successful German export machine relies on growth and consumption on the part of Germany’s European partners, which directly conflict with Berlin’s desire for fiscal austerity on their part. If, as Berlin insists, the Greeks and others must tighten their belts, who will buy German goods? French Finance Minister Christine Lagarde’s solution is to ask the Germans themselves to stop saving and start consuming, thus rebalancing Europe’s out-of-kilter economy. Anyone familiar with the past century of German history, however, knows this is a non-starter.

Fiscal stress has revealed widespread institutional underperformance, as well. The growing fissures produced by the financial crisis have not been effectively managed by the sprawling EU apparatus. Indeed, they have probably been exacerbated by an increasingly fragmented and complicated system. While Europe was arguably “deepened” by the adoption of the European Monetary Union—despite the fact that no political counterpart to the central bank manager ever arose—it has been simultaneously “broadened” by the accession of new members. As the European Union has grown to 27 states, the European Commission has taken on a raft of new regulatory powers, the European Parliament has emerged as a real legislative body and, most recently, the European Council is headed by a permanent President and full-time Foreign Minister.

These institutional developments, impressive on paper, obscure and probably dissipate what earlier gave real drive to a European purpose: the back-room Franco-German decision-making partnership. With the growth and elaboration of EU institutions, this partnership, embodied earlier by de Gaulle and Adenauer and later by Mitterrand and Kohl, has become increasingly more difficult to sustain. Both the German and French governments thus tend to give lip service to the European project even as they gradually “re-nationalize” important aspects of their foreign, security and economic policies. Perhaps nothing illustrates this more clearly than Merkel and Sarkozy’s decision, taken after the prolonged and painful European debate on the Lisbon Treaty, that they could not tolerate a strong new President of the European Council, opting instead for Herman Van Rompuy, a little-known and unassertive Belgian politician.

The financial crisis and the paralysis of Europe-building have so preoccupied European institutions that they have had little time to focus on a new array of strategic challenges facing the continent. Despite widespread concern and discussion about Europe’s dependence on Russian oil and natural gas, the European Union is still very far from designing a common energy policy. In northern Europe, Germany’s “partnership” with Russia has made it a regional energy hub, but this does not serve the interests of most other EU members. The same is true of energy links in southern Europe that Italy is working hard to establish with Russia.

There are two areas where Europe’s abundant stores of “soft” power could be deployed to effectively advance broader Western interests. The first is Ukraine. A strong, stable, and independent Ukraine is clearly an important European interest. A weak, divided, corrupt Ukraine would lead to broader instability in Eastern Europe and perhaps a confrontation with Russia. With a newly elected President in Kiev, the time is ripe for a nation-building initiative designed to move Ukraine closer to Europe. So far, however, there are few signs this will happen.

A second priority is Turkey. Its strategic importance is hard to exaggerate. A prosperous, democratic Turkey, anchored to Europe, would be a significant strategic asset for the West. But Turkey’s ties to the European Union, its evolving role in the greater Middle East and even its domestic stability are becoming problematic. Needless to say, current conditions within the European Union rule out Turkish accession in the near term. But EU governments, beginning with those of Germany and France, have strong incentives to keep the process alive and, if necessary, to devise other means to tether Turkey to Europe. The presently distracted European Union, however, shows no signs of any such creativity.

The European Union is not going to disappear, of course. But the financial crisis, institutional underperformance and strategic drift have combined to put the European project at risk. With monetary union and steps toward political union, the reach of the Europeans may have exceeded their grasp. Instead of soft power, the Europeans may end up with little or no power.

Richard Burt, a former Assistant Secretary of State for Europe and Ambassador to the Federal Republic of Germany, is managing director at McLarty Associates, an international advisory firm.