Saturday, July 07, 2012

Is Europe Over?

Europe is the new sick man. It is crisis after crisis, Greece followed by Ireland followed by Portugal followed by Italy followed by Spain followed by Cyprus followed by, possibly, France, into abyss. The Euro-sceptics feel vindicated: Suddenly the issue of a referendum whether to stay in Europe is back on the agenda in Britain. The European dream, not just the Euro (which Britain was never part of anyway), seems to be over.

However, only a few years ago, Europe seemed like a model, in environmental activism, foreign affairs and in balancing the strife of a capitalist society with the need to protect and nurture the vulnerable. It is a few years of clueless leadership, combined with global economic crisis, that stole Europe's leadership credentials. However, I shall argue that it is too early to write off the European model, and indeed, if this implodes, we are back into some serious trouble.

One has to remember that all the gloom and doom about Europe comes from the instability of the Euro, which is somewhat separate from the political experiment that remains at the core of the European Union. This is not to say that the troubles are not significant, but it is disingenuous of British politicians to use this as an excuse to severe the political links (while wanting access to the European single market). However, Euros troubles are inherent in any currency today, at a time when decades worth of financial folly of creating asset price bubble through easy credit needs to be corrected. The difference between Euro and other major currencies is that the Euro is not backed by any political union or will, and its most powerful leaders couldn't make up their minds how to act for a while. However, the crisis may also mean that Europe is further down the road of correction than the other major economies, whose borrowing costs are not true reflection of their credit-worthiness but just a temporary bounce on the back of Greco-Roman disturbances. In fact, one can argue that these troubles will finally push aside Europe's generation of myopic leaders, like Sarkozy and Berlusconi, and create the space for a new generation of leadership more committed to the political project. [This may, at a later day, lead to Britain's exit, which will strengthen the Union]

But, such optimism aside, one can ill-afford the political project of Europe to fail. This is the way world's capital-rich countries keep peace and maintain harmony. A fall-out will return us to the dark ages of Franco-Prussian rivalry, which may start with trade, but wouldn't take long to degenerate into territory and other kind of dispute. Besides, Europe is an idea of peaceful coexistence, which, even if its is strenuous, is a model for rest of the world, particularly Asia and Africa, and may prove pivotal in maintenance of our current world system at least in the immediate term. One would think the idea is strong enough, and embedded enough, for Europeans to maintain it at all cost. As for Britain, it was never part of the project anyway: As a Dutch observer once told me, if one could float Britain on the Atlantic, it will neatly fit around the New York harbour.

Politically, therefore, Europe may emerge stronger after the crisis, and if Britain is to leave, this will allow the mainland Europe to band together closely (and may even align itself to Russia, Quelle Horror!). In fact, one should survival of Europe as a coherent entity as key to Western dominion of world politics, and economics: If Europe disintegrates politically, it will destroy Britain and distract America. 

So, while European leaders get their act right, they will receive all the support possible from Britain and America. It is unlikely to disintegrate in the short run, because, despite the cynicism of American investment banks, it is what keeps the wheels of capitalism go round. However, in what form it will emerge after the crisis, and what impact a closer integration of Europe will have on rest of world, will remain to be seen.

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