Sunday, 24 June 2012

The EU as a slow motion Titanic

The EU Observer blog has published an excellent post written by the Brussels based journalist Gareth Harding:

Under pressure to take bold steps to avert an economic meltdown the European Union is in danger of sleepwalking into a political union that might save the euro in the short-term but could lead to the EU’s collapse in the long-term.

German Chancellor Angela Merkel has already come out in favour of political union – as have the foreign ministers of 10 EU states. The presidents of the European commission, council and central bank have also called for much tighter EU control over national taxes, budgets and economic policies. Even British premier David Cameron believes in an ever closer union of eurozone states – although safe in the knowledge that the UK will never take part in it.

To a certain extent, calls for a political union are both logical and predictable. Logical because monetary union without a real economic union was always a non-starter. And predictable because when faced with a crisis, the default position of most EU leaders is always ‘more Europe.’

The fundamental problem is there is little desire for political union from the peoples of Europe and moves towards EU control over taxes, budgets and other core state competences could split the union asunder.

In a Pew Research Center poll published last month, only one-third of respondents in the eight countries surveyed believed European economic integration had strengthened their country’s economy. And in another study carried out by YouGov-Cambridge in March, 68% of Germans, 70% of French and 89% said that tax rates and national budgets should be controlled by national governments, not by the EU.

At the end of the recent G20 summit in Mexico U.S. President Barack Obama confidently predicted: “Europe is moving towards further integration rather than break-up.” In fact, it is precisely further integration on the scale envisioned by Merkel and co. that will lead to the break-up of the union.
From the Austro-Hungarian empire to the Soviet Union, history is littered with examples of artificial political constructs that have come unglued because of overstretch. The dilemma for the EU is that without more integration the euro will fail and with it the 27-member club risks splintering.
The obvious solution would be to admit the euro was an ill-conceived project that has no popular legitimacy, has created division not unity and brought penury not prosperity to many. A looser club of sovereign nations – as the EU has been for most of its history – would disappoint the dwindling band of EU federalists but at least preserve some of the big benefits the Union has brought over the last 65 years.
Of course, European leaders would never agree to this because scrapping the euro would entail too much loss of face. The EU also doesn’t possess a reverse gear. And so, like a cruise ship heading towards an iceberg, it braces itself for a collision with the captain shouting ‘full steam ahead.’

Harding is of course right. The European Union is a slow motion Titanic. But who knows, maybe the wreck could be converted to a more sensible "EU light" ship?

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