The end of the European Dream

 

To say that the European Union is in a crisis would be an understatement. The EU has went through numerous crises in the past and its doom has been predicted over and over again without ever materialising. The answer to difficult problems has always come after lengthy discussions and it has always been more integration. But this time is different. For EU standards, the current developments are answered at an impressing speed. After so many rounds of negotiations, political socialisation has taken its told at all the levels, EU leaders honestly starting to see each other as colleagues and being more inclined to accept deeper integration. Crisis hit countries are willing to cease even more sovereignty in return for help, not just in the Eurozone but in other member states as well. All these developments have happened in less than two years and are bound to be followed by more. But nobody is impressed. While solutions might have come at a record speed they have still not come fast enough. Coordination/Integration might have gone to levels unimaginable just 5 years ago but it needs to go much much further than this if there is to have any chance of reigniting the idea of transforming the EU into a superpower. But that will not happen and the rest of the world knows it. The public is not ready to put the EU before the country and it will not change being Greek or Finish in order to be European. Failing to convince the rest of the world that solidarity is indeed a basic value of the EU, the Union has lost any claim of leadership in world affairs. The EU's power is given not by an equation of adding up member countries capabilities but also by multiplying this sum by a factor representing the willingness of these states to work together. And at the present, that factor is close to zero.   


How did we get here?

It is hard to put the blame for this situation on one factor alone. The origins of this are complicated and go long back in time. The Euro was created with a fundamental flaw and everybody knew this was the case. A monetary union cannot survive for long without a fiscal union and strong political coordination (preferably a full fledged political union). But, at the introduction of the currency the hope was that these will come at a later stage, once the public understands the benefits of a common currency and is willing to give up even more sovereignty so it can enjoy these benefits. In the meantime, it was up to the politicians to ensure stability. But power corrupts and it was impossible for many politicians not to take advantage of the opportunity to borrow at low cost and give the public more than it deserved so they could be voted in power again and again. When leaders become entertainers any plan for progress is rapidly put aside.

Without progress and growth, there are no benefits for a common currency. How would Italy export more in the eurozone when it actually produces less than it used to do when it was using the lira? Differences between the North and the South were not supposed to happen. Politicians were expected to coordinate their policies until a fiscal union would become possible but a top-down change cannot happen if the top does not actually start to change.

But whatever happened before the first wave of the economic crisis could have been easily solved. A European plan of reforms would have helped the EU come out of the crisis stronger, not weaker. The crisis was, in a way, a golden opportunity for the EU to impose itself as a world leader but it became a missed opportunity (by a very long shot). It was an opportunity that transformed itself into a curse as the response to the problems was uncoordinated, chaotic, without any clear vision for the future and it ended up sinking the EU's prestige.

The lack of a coherent European response can be blamed on Germany. Chancellor Merkel's refusal to guarantee bank stability at an EU level opened the way for the market to attack weaker states. She failed to see how connected the financial system was and when this became obvious she preferred to play down the risk of contagion. When the mistake became clear, it was already too late. The moves needed to fix the situation were so politically toxic that none of the politicians even dared to mention them. Eurobonds and full fiscal union were dismissed as soon as they proposed and every compromise reached was so insignificant that it actually scared investors even more and aggravated the crisis.  Contradicting statements only made matters worse. There was nobody in charge and the 'giant with many heads' seemed to be committing suicide by banging its own heads together. As a pro-European I have to say that the whole performance was grotesque and shameful. It became clear that there was no coherent vision about what to do, there was no complete and realistic programme put forward and, as the rest of the world was looking at the developments with horror, the EU leaders continued to fight each other.

Confidence betrayed in the Euro family

But it would be a mistake to point the finger at politicians only. The public is equally at fault because the politicians only did what the public opinion was demanding from them. Nationalistic views became the norm and no pro-European view was pushed forward. As the crisis started to be felt, people expected to have priority in receiving help from their own government not realising that in order for their situation to get better, they would have to accept helping others. The spiral went down and World War II was mentioned a couple of times as claims of forgotten unpaid past loans became arguments and discussions shifted from how to save the Euro to who deserved to be it the Euro (forgetting that one of the founding creeds was that we would all eventually use the Euro).

While all these were happening, the European Dream had died. The Union started looking less like a happy, rich and educated family and more like a fight-ridden, vicious familly on the brink of a divorce. The EU lost its credibility both outside and inside of its borders. Philosophical promises of peace and wealth are now so emptied of their meaning that they tend to be contra productive when they are used.



Where do we go from here?

There are no easy solutions to end this crisis. Realistically speaking, we have gone past the point where the worst outcome would be to have a small country defaulting and leaving the EU. The chances for a full disintegration followed by social instability and economic depression are no longer zero. As France prepares to have its rating downgraded, the EU is running out of time to prevent the crisis from becoming its end.

As I see it, there are only two ways in which this could end. The positive (if you could claim that any outcome might still be positive) solution would be reached only if the Nordic countries accept some sort of sharing the debt as the Southern states push further with reform. It is not enough for the Northern block to share the burden or for the Southerners to implement strict austerity, both have to happen if there is to be a long term solution that could lead to further crises being avoided. For this to happen we need strong politicians that can convince the public of the necessity of these changes. A clear vision for how the EU will look like in the future and how it plans to get there needs to be put forward. Crucially, this must be a vision that all its members adhere to, those who do not accept it should be free to leave the Union (and yes, this is a direct reference to the UK). I don't see anything wrong in German fiscal discipline becoming the norm across the continent, it is a price that all of us should be willing to pay if we actually want a future that could deliver growth. If that means that we have to make sacrifices today, then so be it. These sacrifices should, however, be fair. The is no point in punishing the Greeks or any other people and make them go through humiliating poverty, graduate steps and moderate changes will be more easily accepted. The money to solve all the problems are already there, the investors have them, the EU only needs to convince them that it is credible as an investing opportunity.

Or, we can just give up on the EU and try to save what we can on a national basis. Stopping the free flow of labour and money (because if the Euro goes, so will the EU; the social impact of breaking up the eurozone would be too great to handle within a free border area, what would stop the Greeks from just leaving the country and move to Germany?) would have dire consequences on the continent. The problems would be so complex that there will be no one ready to take a risk and invest in a new business, the economy will sink as tariffs and regulations would take the place of the free market. But worse, socially, the public will blame all its problems on the EU and on other EU members. There will be a dangerous level of resentment and we will face the same dangers that we faced in the 1930s. And we all know how well that worked out. This scenario might seem too extreme but I am afraid that it is not as improbable as it sounds. Even the slightest chance of this happening needs to be treated seriously and actions to avoid such a situation need to be taken as soon as possible.

Slow and steady, further to the right.

The shocking news of Oslo being bombed made me feel disgusted. Why on Earth would anybody want to harm such a peaceful country? A country so open and so tolerant would not have figured on my list of places under the threat of terrorism. But I did the same mistake as all the others, I forgot that extreme Islamists do not have a monopoly over terrorism. I had been fed so many news, articles and studies on terrorist attacks committed by Muslims (I won't even go as far as saying by militant Islamists because many of them do not have a pure religious motif) that I immediately assumed that a terrorist attack would be the work of an Islamic terrorist.

The media agreed with me. All media agencies reported that terrorist groups linked to Al-Qaeda had hit Oslo. The terrorist experts invited on the set were ready to dismantle any doubts that I (and many others like me) might have had about the aggressor by finding a reason for all of this. The terrorists, they went to explain, attacked Norway because of its presence in Afghanistan and because other, more high-profile targets had become too vigilant and an attack on them would have been harder to plan. Well, if the experts say that's how it is, that's how it must be, right? But then came the information of the shooting on the Labour youth camp. And with that it became clear that the attack had a political cause. What happened next, we all know. The experts quickly changed their views (except for a few US based ones who continued to insist that the attack were the work of the Islamists), televisions changed their headlines to eliminate any mention of al-Qaeda and of Muslims. It was a few hours later, when the reasons for the attack became clear, that the Muslims became part of the headline again. This time as victims (though many who posted comments on websites continued to blame everything on the Arabs/Muslims/any other minority that is not white and Christian).

The blame, however, falls entirely on a white, local, Christian man. An insane person, if we're to believe his lawyer, but one that is a perfect exponent for the danger that is increasingly threatening Europe and, in a different way, the US. Namely, the movement of the political debate (and the popular opinion) towards the right and the far right. As the picture from the Guardian's Research Department shows, 22 of the 27 EU countries are now under the rule of right wing governments (that will soon be 24 as Spain and Greece will most certainly oust the ruling parties at the next elections ). The fact that right wing parties now control most of the EU governments is not, by itself, a dangerous one and shouldn't surprise many people. People tend to react to economic problems by becoming more conservative. But with the moderate right, the extreme right grew as well.


While Marine Le Pen of France's Front National is seen as the poster figure of the far right revival, I believe she is not to be feared at the same extent as other political figures. Yes, she might get into the second round of the presidential elections with a virulent nationalistic and xenophobic message but she will not govern France. A good result for her would be shameful for the French but will not have a significant impact on the way the country is governed. No main party will form an alliance with the FN. She will not gain anything else except more opponents.

The real danger come from former fringe parties. People know what the Front National stands for and, as it has been in the political spotlight for such a long time, the public has had a chance to see that the party is not very different from the 'centre' parties in its lack of honesty and capabilities. But other small far right parties around Europe have been helped by the economic crisis too. As they started growing, their message became increasingly presented to the public. Unlike the Front National, they did not yet have the chance to prove that they are as (or even less) capable to find solutions for the problems of their voters. Their only message seems to be that others are to blame for the difficulties that the country faces. The blame goes almost entirely towards the Muslim migrants and the EU. The vilification of the foreigner in times of crisis is normal. The response from the centrist parties is not. Fearing that they will lose votes (or in some cases, they would lose power altogether) mainstream parties have made concessions to the far right parties. They have even adopted some of their ideas (I wonder was Merkel was thinking when she declared 'multiculti' dead) giving even more legitimacy to the extremists' claims. As this spread across the EU, it became acceptable for Fidesz, the governing party in Hungary, to take policy decisions (while holding the EU presidency) that a few years ago would have cause strong responses from the EU institutions. It has also become acceptable for mainstream parties to flirt with extremists either by inviting them to form the government or by passing certain policies in exchange for political support.

This game of bargaining with the devil brought even more popularity for the far right as there was no real debate on the merits of their proposals. It was, of course, easier to blame the migrants for the problems of the country. They stole jobs and hurt the traditional society with their Muslimhood. And this all happened under the supervision of the EU which wants to bring national governments to their knees and humiliate the proud nations of Europe. This message is easier to sell than 'it actually is our fault'.

In this framework, a guy (naming him would only give him what he wanted) tried to transform himself in the savior of his country. He tried to open the eyes of his people by killing the ones he saw responsible for the perceived decadent state of his society. He did not manage to do that. So far, Norway has acted exemplary, condemning him and his ideas and standing firm against any threat to its openness and democracy. Others haven't been so inspired. Politicians from all the corners of Europe (Jacques Coutela- France, Front National; Mario Borghezio- Italy, Northern League; Iulian Urban- Romania, Democrat Liberal Party and, sadly, many others), journalists from both side of the Atlantic and other various public figures have tried to find an excuse for the terrorist acts. They deplore the loss of human life but agree with the reasons behind the attack. So the blames falls yet again on the Muslims for infuriating a mad man or on the EU for allowing the Muslims to infuriate a mad man. It is worrying that these views are expressed with so much openness. But even worse seems to be the response they receive. Looking at the comments from newspapers' readers, you can see that this is a wide spread phenomenon. A lot of people truly believe that the monster was right.

What does this say about our society? I guess it is too early to say. But for all those who think that far right claims have any kind of legitimacy, please remember what happened last time when we believed in them.

The best thing we never had

We grew up in a shiny little world. There were no bad guys to steal our candies and as long as we behaved we would get our daily portion of chocolate. We saw our parents take holidays around the world and we got a lot of presents for our birthdays. Most importantly, we were promised a good life. We grew up knowing that if we worked hard enough we would be able to afford chocolate (or whatever the adult equivalent, for me it's still chocolate), we would have the time and money to see the world and and we would continue to receive- and give- a lot of presents for birthdays. But for many of us that is not the case. Youth unemployment is growing, reaching record levels around the world. In the EU, youth unemployment is over 20%, with the European Commission not being able to find any positive comments on the situation except that 'rises in the youth unemployment rate have weakened recently'. The US as well counts a 1 in 5 rate of unemployment for the 16-24 age group with many analysts saying that this could cost Obama his second term as he no longer has a huge support in the youth groups (only 53% compared to 74% in 2009).




The effects of this situation have already had a huge impact around the world. Youth unemployment has already been one of the important factors that sparked revolutions in the Arab world. The Spanish indignados have inspired similar movements around Europe, which can mobilize easily through the internet to upset elections and not only. It is not surprising then that politicians have started to react. Trying to calm down the younger generations, they have blamed everybody for the problem. It's the immigrants that have taken the youth's jobs, it's the other parties that took wrong decisions (it is funny, I guess, how it's always the other party), it's their own fault for not creating new businesses (no words about how hard it is to set up a new enterprise though). It is normal for politicians to blame someone else. What is scary is how many people believe them.

And that is because it is not just the politicians' fault. It is our parents' and their parents' fault as well. For decades we have been living a life beyond our means, making of consumerism a new religion. As I said, we were given tons of presents, we got used to changing the family car every few years, to buy a new TV whenever we get bored with the furniture and decide to refurbish (of course we bought new furniture as well), go on trips that we would pay for with the credit card and so on. We consumed without creating that much. We spent money that we didn't have and expected others to pay for us. Well those others that pay for things consumed long time ago (and I include the money borrowed by the government and invested in projects that had no other purpose except keeping the voters happy) are going to be the younger generations. That's us. And our children. And probably our children's children (if they decide to have any).

So let's now look at solutions. What can we do to fix this? Well, first, we can forget our consumerist way of life. Stop making loans for things that you don't need and spend the money that you do have in smarter ways. Invest in things that can give up profit/pleasure on the long term. Keep an eye on the politicians because they spend YOUR money. They don't spend their own money but the money that they take from you through taxation. Next time when they want to invest in a project think about whether you really benefit from the investment. Does your city really need a £900.000 statue on the corner of Main Street? And we, the young, can do our part too. First of all, don't stop from putting pressure on the politicians. Remind them of your problems, continue with the protests (in a sensible way, we don't want to give them any more excuses). And keep informed. It is very important to keep informed. You can't complain if you don't understand the bigger picture.

We can't expect to live the life promised by our parents. We will have to work harder for the same pay and longer for the same pension. We won't have as much time to go around the world. But it can be a lot worse. We can pretend that nothing is wrong and demand for the promises made to be kept. After all, we did our part. We didn't misbehave (that much), we did our homework and ate our cereal. But would that be fair to our children?

The Greek crisis and how it will change the world

We remember 2001 for the terrorist attacks of 9/11. The rest of the decade was hugely influenced by debates and actions related to the terrorist attacks. Presidential campaigns were fought over how to deal with the repercussions, the idea of security started to bite off civil liberties, governments tumbled around the world (at gun point or at the ballot box). But as the author of the attacks was erased from the list of the most wanted people on the planet and the dust began to settle on the rubles created by 9/11, the world wakes up to a different crisis. One that started in 2001 as well but was initially seen as unimportant. On the first of January 2001, Greece joined the euro zone. Greece so became the 12th member of the currency area, giving up the drachma after dramatically cutting inflation and interest rates. Fast forward to 2011 and the Greek debt crisis is threatening the very existence of the European Union, the most successful liberal experiment in world history. With the EU, the world economy might be tore apart.

Greece no longer seems to be a sovereign country as the EU and the IMF essentially control the its finances and with it the entire economy. It is not just the people that have lost control but it is the Parliament as well. While the recent measures might have been adopted by the Parliament, we shouldn't fool ourselves by thinking that this was done in an independent way and not at the pressure of the EU and the IMF (expressed in the most public and direct way possible). As the problems in Greece are here to stay, it is not a matter of time until Greece will reclaim its sovereignty. The situation might be permanent and might prove to be a model for further integration not just in the EU but in the entire world. Though this experiment is just starting in Greece (the place that started other political concepts that ended up changing the world) it can spread fast to other countries as well (starting with the periphery of the EU, continuing with the EU and then spreading around the world).

If it does not default, Greece will eventually pay its debt through the crisis- management mechanism to be established in 2013. So the actual payer of all the debt will be the EU as a whole not just Greece. In return for this favor, Greece gives up its economic sovereignty. As this situation will probably extend in one form or another to other countries (already happening to a lesser extent in Portugal), other EU countries will see their economies becoming even more interdependent through loans, with a European Central bank increasingly influential and a system that allows the Commission to exert even more power over national budgets to prevent further crisis, the Europeans will slowly start to get used to supranational institutions playing an important role in their economy and society. It will be the next step in European integration with another dose of internationalism added as the IMF will be involved as well.

There is, however, another possibility. The population might not be ready for this step yet. The Greeks might not accept the austerity proposed by foreign powers and Northerners might not want to accept to pay the bill for governments that didn't know how to manage their money. Not just on the long term term, the danger is that nationalistic forces might tear apart the EU. This is an extreme scenario as resentment could rapidly get out of control, with the masses accusing one country or another for their economic difficulties. If a political and institutional disintegration of the EU would be coupled with another economic meltdown, we would have the perfect ingredients for a violent situation.

The two scenarios might seem just the extremes of a range of other possibilities but as the crisis continues, the possibilities in between them quickly become improbable. With Greek debt ballooning increasingly faster (it is expected to grow by another 25% of the GDP this year alone) it becomes clear that the country will not be able to pay its debts. So it will either give in to the protesters by defaulting and leaving the euro, which will rocket the markets and probably start a default domino that would engulf all Southern Europe, wreaking the world economy at the same time; or it gives up its sovereignty and sets up a precedent. The EU will have to further integrate its market and the budgets will no longer be decided in national capitals but in Brussels, either by the Commission or by the Council (we can argue that they already are decided in the Council). This might be hard to sell to the national audience but a refusal from a nationalistic party that takes power in an EU country would have roughly the same consequences as a Greek default (which it will probably cause anyway).

The current crisis is a proof of how interconnected the EU economies already are. If a country that represents only about 2% of the eurozone economy could bring down the currency and Union, it means that the system components are extremely interdependent. Or that the system itself is badly managed. Unfortunately, both are true in the case of the EU. If economic integration becomes the chosen solution, the management of the EU must be reformed as well. The immense bureaucracy must become a thing of the past, decisions would have to be taken fast and regulations would have to be less hard to implement.

Whatever happens, it will probably have great implications for the rest of the world. The world economy will not easily cope with an EU fragmentation (let alone any kind of violence in Europe). But if the integration process will prove to be a success, it will become a model for other regions as well and it will encourage the economic groups already existing to accelerate integration.

The moment that many politicians have tried to avoid throughout the history of the EU appears to have come. A single European economy over which national governments have only a minimal influence could mean the death of the idea of sovereignty in Europe. And if Europe countries accept this (and it proves a success), why would the rest of the world act any differently? That Greece is the place where all this is happening only seems to be appropriate.