Internal divisions put eurozone at risk
The year of 2017 is symbolic for Europe as it marks the 60th anniversary of the Treaty of Rome, which set the foundation for today’s EU. Brussels is preparing various activities for this occasion. The events, however, are not celebratory, at least for the majority of the people in Europe. The beginning of the debt crisis in 2009 caught the EU completely off guard. European politicians had not acted in good times for bad times. This mistake is unforgivable and cannot be corrected in hindsight.
In spite of this failure, Germany – the EU’s strongest economic power – managed to save the eurozone with bailouts and the creation of rescue funds, namely the European Financial Stability Facility and later, the European Stability Mechanism. However, the price was very high. Loans were provided in exchange for tough austerity measures and painful reforms.
As a result, internal divisions between Northern and Southern European states came to the forefront. Richer countries have found it bizarre and useless to lend money and poorer ones have been exhausted by making sacrifices and losing national sovereignty to reduce deficits. Europe almost undertook the role of a policeman who supervised the compliance of problematic states with the bailout terms instead of having a vision for the future and creating jobs.
The eurozone avoided a great shock in the summer of 2015. At that time, the Greek government finally agreed to receive a third loan in order to keep the common currency despite its radical leftist and anti- German agenda. It was only a matter of time, however, for this shock to occur.
One year later, British citizens voted for the exit of their country from the EU. The existential crisis was no longer a theoretical nightmare but a reality. Warnings from mainstream politicians and the media were ignored by the ma- jority of British people who thought the UK could do better on its own.
The situation has been perplexed even more by the refugee crisis. An unbearable onus has been put on Greece and Italy to accept and host the wave of desperate refugees fleeing their countries in the Middle East and Africa. Most EU countries refrain from applying the relocation plan and prefer to close their borders or economically support Greece, Italy and other countries to build refugee camps and control their borders. The principle of multiculturalism is absent and new internal divisions arise in the EU while right- wing and euroskeptic parties are gaining ground.
Europe’s multifaceted crisis has been reflected by the way other powers are viewing it. There is no better example than the US under its President Donald Trump. Trump considers Brexit “a wonderful thing” and seems largely indifferent to whether the EU and the eurozone remain united or not. His comments have caused frustration in Brussels but they mirror the grim reality. Within this framework, some Europeans have already seen the danger of a breakup of both the eurozone and the EU coming and they are proposing measures to avert these dramatic developments. Most of the measures advocate for the creation of a fiscal and political union.
Recently, the presidents of the national parliaments of France, Germany, Italy and Luxemburg decided to take part in the debate on the future of Europe. Writing an article in the Italian Daily La Stampa they urge for more integration and call for a federal Europe.
These people are right in diagnosing the risk and suggesting remedies. Nevertheless, Europe never lacked theoretical ideas on how to proceed. It lacked the political will to implement them. It may be a coincidence that the aforementioned letter appeared around the same time the White Paper of the European Commission on Europe’s future was published.
This White Paper is rather vague and discusses five different scenarios, namely “carrying on,” “nothing but the single market,” “those who want more do more,” “doing less more efficiently” and “doing much more together.” Leading pro- EU newspapers reveal the truth. “Europe starts to think the unthinkable: breaking up” was the headline of a Financial Times article a few days ago.
Undoubtedly, future decisions are in the hands of Germany, which does not positively see a holistic transfer union. It, therefore, only takes cautious and baby steps toward this direction. In recent years, the eurozone has preserved its unity principally due to the self- preservation instinct. But, this is no longer sufficient.