There is no question that the concept of a union of European
states once held special political meaning for France. After World
War II this theme, which had been mooted earlier after World War I
by Jean Monnet, was accepted as the perfect device for ensuring
Germany would no longer have the potential to rise up and devour
the rest of Western Europe. The danger emanating from Soviet
expansion was something for the United States to worry about. What
French leaders — particularly Gaullists — saw in unification was
a chance for France to dominate Western Europe politically and
economically.
It was natural that any legitimate political union of European
nations would require economic union, first through a common market
and then through a single currency governed by some form of central
banking system serving all member countries. The problem that is so
clear today is that economic and even limited financial union
through a single currency holds hostage any political union.
The idea that the power of Germany would be contained by the
unification of Europe has proven false. All of Europe, and
specifically France, waits in great expectation for the latest
pronouncement to come from Berlin. Meanwhile Chancellor Angela
Merkel carefully husbands her counsel so as not to step on her
domestic political constraints. Driving this dynamic is the clearly
declared unwillingness on the part of the German public to assume
any greater financial obligation than it must to keep Europe’s too
numerous “sick men” (Greece, Italy, Spain,
Portugal, Ireland, and possibly eventually even France) from
drowning in red ink.
The hope — and it’s hardly more than that — is that a
comprehensive new program can be put together by the International
Monetary Fund (IMF) in concert with the European Central Bank.
There is no lack of brain power, but there is a lack of available
funds to do the job. No one in Europe wants to face it, but a large
financial participation (some would say aid program) must come from
outside the eurozone. This means China. There could be input from
other so-called “emerging economies,” but without Beijing’s now
considerable resources revitalization of the Eurozone is clearly
doubtful.
The elephant in the room is the dream itself of a single
currency. It appears that most of the intellectual orientation on
countering the debacle in progress is based on saving the euro.
When this is questioned, the answer eventually comes around to the
perceived connection between the single currency and the European
Union as an existing entity. The implication is that without a
single currency, political unification of Europe would be
nullified. This is a complete reinterpretation of the original
justification for the EU. The euro does not exist
to hold together the union of Europe; it’s the other way
around!
It is quite clear that Germany would not be adverse to a
well-managed return to their D-mark. And certainly economic
development for Germany does not depend on having the same monetary
unit as Greece, Italy, Spain, Portugal or France. If cooperation on
foreign policy and even regional economic policy could evolve as it
did before the advent of the single currency, it surely could be
accomplished again.
It was said that the inability of the separate national entities
to operate effectively without subsidization by its neighbors would
continue as long as there was no complete political unification and
integration of life throughout Western Europe. If that is the case,
the ambition is already lost. European identity is not even near
overcoming the national identities. Reality dictates that Europe’s
leaders and the rest of this interdependent financial world accept
the fact that the euro cannot work without the European Central
Bank manufacturing money. Alternatively Europe must be thrown an
international life line.
The American and Chinese economies, as well as major energy
exporters such as Russia and the Middle Eastern oil producers,
depend greatly on their sales to Europe. It will require painful
financial cooperation principally by the U.S. and China, but that
is the only path to a return to stability in Europe — and
globally. And this is after Europe, itself, fully commits to its
own fiscal survival.
If this is not accomplished, and the euro is mortally assaulted,
the European Union will become nothing more than a mechanism for
border-free travel and an exercise in economic and concomitant
political degradation. The rest of the world cannot afford an
unrestrained flight from the euro and subsequent bank collapses
from debt defaults that would have been caused by the fall of
Europe’s single currency.
The answer in the end has been so far unattainable. The members
of the EU must agree on sharing the losses so far accrued. Only
then can a heavily refinanced IMF come in with additional
contributions from outside nations. Solving balance of payment
problems has been the IMF’s raison d‘être. With
increased financial strength it could be the lifeguard for the
eurozone. But this only can come about after the eurozone
participants have worked out their own program for recovery. And
yes, Germany must lead the charge to plug the breaks in Europe’s
lines.
So much for eliminating Germany’s potential for dominating
Western Europe!
