No one today imagines that Europe will regress to the days when peace was only a brief interval between savage wars. But some of Europe’s thinkers, like Hanns Maull, chair of international relations and foreign policy at the University of Trier, believe the current crisis has brought the European Union’s standing to a dangerous new low.
Maull said a return to the dynamic of German/French hostility, the cause of so much bloodshed over the centuries, is a “credible scenario” over the next decade or two if no solution to the current crisis is found.
Inevitably, a collapse would affect the United States, especially trade centers like Miami. The EU is the world’s largest exporting entity, but “free trade” usually becomes an early victim of economic contraction. In addition, the EU is the world’s largest donor of foreign aid and a critical source of foreign capital for other parts of the world, including Latin America. NATO would remain, but the absence of the EU as a political partner and diplomatic ally of the United States would weaken the Western alliance.
The great unifying force of postwar Europe was the Soviet Union, the common menace. For self-preservation, Europeans forgot about their rivalries and made common cause with the United States — the West, in diplomatic shorthand — under the NATO shield. That gave Western Europe more than a half-century of peace and allowed statesmen to form an economic union and start to build a common future.
But there is a crucial difference between the military alliance and the continental union. In NATO, said Kerber, the head of Germany’s industrial federation, the United States pays the bills and calls the shots. In the EU, each country goes its own way, and that is what the crisis is all about: Who pays (when money is tight), who benefits, and who decides?
Interviews with a number of officials in Germany and the EU made it clear that Europeans believed that by forming a single currency, they would create momentum toward “convergence,” one of the catchphrases of the current period. It means that the mechanisms that would forge greater unity — “More Europe,” in the words of German Chancellor Angela Merkel — would emerge spontaneously in response to the currency arrangement. Today, it is seen as a huge mistake to have assumed that if a common currency was created, everything else would follow.
There is a European Central Bank, but it does not have the powers of the Federal Reserve, and thus has proven inadequate in confronting Europe’s huge sovereign and private debt problem. It can’t “buy” debt like the Fed can. Nor there is there a common bank regulator. Nor is there any agency that can force a government to open its books to verify that its balance sheet is credible.
At one time or another, everyone’s broken the rules. After the Maastricht Treaty was approved in 1993 to formally establish the European Union, the rules of the game were set out, but there was no referee to blow the whistle. “We established stability criteria on deficits and debt — and the first to violate the rules were Germany and France,” lamented Thomas Matussek, a prominent former German diplomat and spokesman today for Deutsche Bank.