June 23, 2011 10:21 pm
Europe’s return to Westphalia
By Philip Stephens
Angela Merkel and Nicolas Sarkozy are forever protesting that the euro and the European Union are indivisible. They mean well. The purpose is to reassure: Germany and France will rescue the single currency because its failure would herald the collapse of the entire European enterprise.
The two leaders may well be right in this analysis. But setting the bold rhetoric alongside the chronic hesitations and indecision of the past year invites another possibility: that cause and effect are running in the opposite direction.
The euro is in trouble because Europe is in trouble. The sovereign debt crisis is symptom as much as cause. Greek profligacy, Ireland’s housing boom and Germany’s reckless state banks all played their part. But the failure to put things right speaks to a deeper malaise.
European governments can save the euro if they so choose. Orderly default by the weakest economies need not be a catastrophe if accompanied by a credible plan to underpin their future solvency and to shore up vulnerable banks in creditor countries.
The public debt of Greece, Ireland and Portugal adds up to about €680bn ($960bn). That sounds a lot. But it represents only about 7 per cent of eurozone output.
Underwriting the debt by issuing Eurobonds would end the panic in financial markets.
Fixing the problem, in other words, is politically painful but perfectly possible economically. The missing ingredients are trust and political will. Voters in Germany are unpersuaded their prosperity is tied to the euro’s survival; and voters in debt-laden nations need to see a plausible path out of the present trap. Ms Merkel, in particular, has to show the leadership that connects ends to means.
A little while ago I spoke at a small gathering hosted by Portugal’s Fundação Oriente at the Arrábida monastery near Lisbon. I called my contribution “Europe’s return to Westphalia”. The thesis – that the Union is turning back the clock a few hundred years as it succumbs to the pressure of resurgent nationalisms – was intended as a provocation. As I watch Europe’s leaders stumbling through the debt crisis I am increasingly persuaded that this is no more than a simple description of present reality.
The modern European state was born with the peace of Westphalia in 1648. The doctrine of state sovereignty replaced the waning supranational authority of the church. As the distinguished Brussels diplomat Robert Cooper has observed, Europe’s rulers purchased domestic order and popular consent at the price of more competition between states.
This system endured until the middle of the 20th century, when the appalling devastation wrought by the second great war within 30 years finally persuaded the continent’s leaders that the cost of sustaining a European order based on the balance of power had become too high.
Europe’s postmodern experiment in shared sovereignty has so far lasted 60 years. Now the bargain is unravelling as governments once again separate narrow national from wider mutual interests. The world has globalised, but politics remains local. Europe’s states are responding to domestic pressures by seeking to reclaim Westphalian independence.
Not long ago the Union was held up as the model for the new multipolar international order. By pooling sovereignty, Europe had cracked the big challenge of globalisation: how to marry cross-border interdependence with national politics. Integration turned a zero-sum game into a positive-sum game.
A common assumption at the opening of the present century was that it would take time for others to acquire the necessary political and economic sophistication, but the EU would eventually become a template for Asean, Mercosur and the rest.
In retrospect, the glue of European integration had already begun to dissolve. The 1991 Maastricht treaty that gave birth to the single currency now looks like the last hurrah of the generation that saw European unity as vital to the continent’s peace and security.
The treaty coincided with the collapse of the Soviet Union and with German reunification. The imperative of Franco-German reconciliation, postwar German guilt, and the existential threat of communism would soon be consigned to the history books. Once democracy was established in the eastern half of the continent, the EU needed a new raison d’être.
German reunification disturbed the delicate balance of a Union founded on the Franco-German alliance. Berlin’s demand that Germany be treated – like Britain, France or Italy – as a “normal” (ie selfish) country has further upset the equilibrium. Germany is too big and too powerful for Europe to survive its pursuit of narrowly defined national interests.
Berlin has not been alone in turning inward. In Paris, more Europe used to mean more France. But the French, the Dutch and others have caught the British disease. Euroscepticism is no longer the sole property of Englishmen reliving the Battle of Britain.
The economic crisis has seen governments across the continent reframe Brussels as part of the problem rather than a solution. Thus the arrival of 25,000 refugees in the wake of the Arab uprisings brought a clamour in Italy, France and Denmark for tighter border controls.
The mindset of the moment is that power ceded to the Union is authority subtracted from national capitals. Governments weakened by globalisation find their citizens demanding greater security. The response to the clamour is to “stand up” to Brussels and refuse to help out their neighbours.
There is no logic here. As the centre of global gravity shifts ever faster towards rising nations, the fragmentation of Europe will only accelerate the pace of its decline.
There is, though, an irony: the new powers with which Europe must now compete have never been much convinced by the Union’s postmodernism. Jealous of their sovereignty, the Chinas, Indias, Brazils and the rest much prefer the Westphalian system. Their model is 1648 rather than the Treaty of Rome.
So history may look back on the past 60 years as an interlude. The leaders at the Brussels summit this week may yet come up with a plan to save the euro. I am not sure they know how to save Europe.
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