The End of Europe?
Not So Fast

William Hague, United Kingdom Secretary of State for Foreign and Commonwealth Affairs, has described the ongoing situation in Ukraine as the “biggest crisis” facing Europe this century. Ben Judah, journalist and author of Fragile Empire: How Russia Fell in and Out of Love with Vladimir Putin, believes that the Russian President no longer fears the Western reaction to his invasion of a soveirgn country.

A situation which at one time appeared extremely volitle, with warning shots fired and ultimatimums reportedly issued, now seems to have settled into an uneasy stalemate. It is in this context that Yale author and regular blog contributor Lyric Hughes Hale considers what these events mean for the future of Europe and the European Union.

This month marks the 50th anniversary of the appearance of the Beatles on the Ed Sullivan Show, a watershed in the history of US-European relations.  With the “British Invasion” Europe rebounded from war in the American imagination, and became a place that captured the hearts and minds of the young.  No longer grey and dreary and bombed out, it was suddenly cool, a cultural leader and a place everyone wanted to go.

Today, the perception of Europe from the US side can be summarized in the following lines from a poem by Mark Bibbins that appeared in the New Yorker a couple of weeks ago:

Europe: you swear it exists because you once had sex in it, and ideas.

This attitude pervades not just public perceptions, but the private musings of US government officials.  A diplomatic kerfuffle, accelerated by social media, caused smirks on this side of the Atlantic.  It was reported that US Assistant Secretary of State Victoria Nuland exclaimed “f**k the EU” to Ukraine’s ambassador to Washington.  She was expressing her disappointment, as well as the Administration’s dismay, at the handling of the Ukrainian crisis by the Europeans.  German Chancellor Angela Merkel expressed her outrage (not at the Ukrainian situation, but at the diplomatic leak).  In a world of increasing risks and dangers, Europe seems self-absorbed, lacking both the innovation capability of the US and China’s commercial energy.  It appears unable to capitalize on and manage potentially positive events on its borders, let alone globally.  Angela Merkel seems to be more of a corporate crisis manager than a leader of 500 million Europeans.

The European financial crisis that dominated headlines so recently seems to have plateaued out, but perhaps we are in a dead spot between the European elections and the summer doldrums that will reignite this autumn.  As economist David Marsh says in his book Europe’s Deadlock, “History shows us how periods of unstable equilibrium can last a surprisingly long time.” In the interim, Europe is certainly not driving global economic growth.  As its fiscal squeeze continues, the social programs of its major economies and the EU regulatory environment seem unsustainable, even quaint.  In a world plagued by malnutrition in the third world, worries about GMO’s for example, seem precious and misplaced.  The scandals and pageantry of its thirteen monarchies are perhaps more relevant to celebrity culture than to standards of behavior and governance.

The rest of the world is waiting for the other shoe to drop.  Gideon Rachman of the Financial Times has proposed a Doomsday scenario for the euro, central symbol of the dream of European unity:

This (scenario) holds that the economic crisis has gravely damaged the euro.  It has stripped the project of support and legitimacy and exposed the design flaws in the single currency.  The biggest flaw remains the lack of a large central budget and a transfer union of the sort that makes other currencies, such as the dollar, work. 

Rachman speculates that the flawed euro could spell the beginning of the end of the European Union itself, to be played out in the May European elections:

The EU’s own polls show the popularity of the Union plummeting in core countries such as France, Italy and Spain.  Henri Guaino, a close adviser to Nicolas Sarkozy when he was president of France, recently gave an interview in which he speculated gloomily ‘Monetary policy mistakes can destroy a society’.

 David Marsh would agree with him:

The unpalatable truth, admitted behind the scenes by experts at the centre of the system, is that Europe’s united money has not alleviated the European crisis: it has been one of its principal causes.

 How did major policy errors occur, and why didn’t the founders foresee the consequences of monetary union without fiscal consolidation?  The history and intricacies of the politics of the European Union is opaque to outsiders.  In Luuk Van Middlaar‘s new book, The Passage to Europe, he describes what he found as a newcomer to the European Council ten years ago:

The implicit codes, the double or triple meanings behind everything that was said or done, the institutional rivalries, the battles to secure a chair at a particular negotiating table, the leaks to the press, the playing with time and delays…

 The gamesmanship of the European Union today reminds me very strongly of China during the Ming dynasty in the 17th century.  After the incredible accomplishments of the Song Dynasty, which created the world’s largest economy, the Ming emperors led China into a magnificent slow decline.   After moving the capitol from Nanjing to Peking, the Ming fell on their sword by attempting the sinification of periphery states, and legal unification through a complex and rigid bureaucracy that surely rivaled Brussels and Strasbourg.  And yes they had a single currency, silver.

The Ming created a triple bureaucracy. The Mandarins, who achieved their status through state examination, governed alongside the Eunuchs, who fought bitterly for the power and the favor of the Emperor.  The Ming also had a think tank that influenced and directed public policy: the Hanlin Academy served as Grand Secretariat to the imperial bureaucracies.  Naturally these three groups fought each other for influence. Rivalries were intense, and bloody.  Over the course of Ming rule, the power of each ebbed and flowed, almost never to the benefit of China’s citizens.

The system was unsustainable, and then China was hit with natural disasters and a monetary crisis that many historians consider to be the immediate cause of the dynasty’s collapse.  The prosperity of the Ming Dynasty was based on huge inflows of silver.  But geopolitical events, including diminishing silver exports from the Spanish empire to Europe, as well as the beginning of sakoku, Japan’s period of isolation, cut off the flow of silver into China.  Monsieur Guaino’s fears for the EU have historical precedent.

The long view of history that China provides also begs the question: are we simply too impatient?  The European Union is brand new. Van Middlaar counsels forbearance.  “A political body cannot emerge in a single moment: it takes time.”  His book is a tour de force of European political philosophy. An entire chapter is devoted to the Greek model, another to the Roman, all to illuminate the grand European experiment that he has witnessed first hand.  As for the euro crisis:

When a storm becomes too fierce and the wind blows your boat towards the open sea, it is better to have a good compass than an anchor, better to rely on your sense of direction than on rules.  So the euro crisis, like the others before it, is forcing the circle of member states to politicize itself, to increase its capacity to act and take responsibility.  The power of the European telos is such that it is revived by every crisis.  In the confusion, the hope of redemption gives way to an even more fundamental desire: to face the future together.  But this opening-up to new experiences demands the abandonment of any notion of returning to a particular port.

Even if it survives, the euro seems on its way to being overshadowed by the internationalization of the Chinese currency.  But dominance can be fleeting.  Increasing tensions between Japan and China could shift the balance back to Europe again.  Marsh says that we shouldn’t count out Germany, the economic center of the EU, quite yet.

The tipping points of German history have often been generated by fatal misjudgments about Germany’s capabilities and vulnerabilities, coinciding with yawning gaps between external perception and internal reality.  A perfect symbol of the German’s innate contradictions: whenever foreigners consider them strong, they are weak, and vice versa.

So will Europe become, as Kishore Mahbubani has suggested, geopolitically irrelevant?  No.  If Asia succeeds economically, but reverts to war, then Europe’s experiment, which all will agree has created a successful and lasting peace, will bring with it a prosperous and sustainable future.

– By Lyric Hughes Hale

What's Next?

Lyric Hughes Hale is a writer and contributor to a range of publications, including the Financial Times, Los Angeles Times, USA Today, Current History and Institutional Investor.

What’s Next? Unconventional Wisdom on the Future of the World Economy by David Hale and Lyric Hale is available now from Yale University Press. Both The Passage to Europe by Luuk van Middelaar and Europe’s Deadlock by David Marsh are available to order now.

Click here for more articles from Lyric Hale

Follow Lyric Hale on Twitter

Share this

You must be logged in to post a comment