Struggle for agreed response to fissures within, amidst shifting world stage, shakes once-basic assumptions.
The permanent twilight quality typical of winter in northern Europe is only adding to the general gloom that has shrink-wrapped the European Union (the EU) institutions at their headquarters here for much of this year.
The EU has attempted to close out 2010 with yet another shot at calming the frayed nerves of investors, who have been fleeing indebted euro zone economies, most notably Greece and Ireland, but also Portugal and Spain. At a year-end summit meeting last week, leaders announced the establishment of a permanent bailout fund for the 16 countries who share the beleaguered euro as a currency.
However, as with the other measures announced by Brussels through the year, this step does little to address the crisis that lies beneath the immediate sovereign debt and currency issues.
The deeper predicament faced by the EU is of identity and purpose. For years now, European integration has been proceeding on autopilot. The creation of the euro zone in 1999, followed by enlargement of the bloc to include several central and eastern European countries in 2004, appeared to have been following a teleological path leading to closer union.
Existential issues
But 2010 was notable for having bared the fact that this path is a lot less pukka than once assumed. The original purpose of the EU, preventing war between its states, has long been achieved. Whether the union retains a clear 21st century reason for existence is open to debate. As the world reorientalises towards the East, the EU is unable to find sure footing in the shifting sands of the new geo-politics, a lack of surety amplified by the brakes put on its economic growth by the global financial crisis of 2008.
The year kicked off with what should have been a celebration for the bloc, the coming into effect of the long awaited Lisbon Treaty – a series of changes to the EU’s rule book, intended in part to strengthen its geo-strategic standing. But the tortured passage of the treaty, taking years of internal wrangling to push through, was symptomatic of the lack of political will and support for a stronger, more empowered Europe.
By January, Europe had a new President and Foreign Affairs Chief in the form of Herman Van Rompuy and Catherine Ashton, respectively. These were not personalities that had much of a shock-and-awe effect on the world’s strategic landscape, a terrain on which the EU was visibly losing its once-dominant position.
The first few weeks of 2010 were dominated by the repercussions of the United Nations climate negotiations at Copenhagen in December 2009. In the run up to Copenhagen, climate change was an issue the EU had firmly nailed its mast, proclaiming itself a world leader on the matter. In the event, the EU found itself largely ignored by a United States that directly cut a closed-door deal with the large emerging economies of the world, represented by China, India, Brazil and South Africa.
The Lisbon treaty and new presidents aside, that the world is increasingly being shaped by non-European interests and forces is a fact Brussels has been forced to acknowledge through the year.
In a report to last week’s year-end EU summit, foreign policy chief Catherine Ashton admitted “Europe is no longer the main strategic preoccupation of US foreign policy”. “The US is increasingly looking to new partners to address old and new problems,” her report continued.
The warning comes in a year when US President Barack Obama cancelled an EU-US summit scheduled for the spring in Madrid, instead spending just a couple of hours in talks with European leaders last month on the sidelines of a NATO summit. By contrast, the American President had spent three days visiting India only a week or so before the NATO meeting.
Fissures within
But Europe’s identity crisis is not only a question of its global standing. An even more serious challenge to the EU’s future are the sharp fissures in attitudes and interests between northern European countries like Germany and their southern cousins such as Greece and Portugal. Germany’s new assertiveness, in particular, has alarm bells ringing in Brussels.
Although Athens’ fiscal woes were evident by the very beginning of the year, it took months of foot-dragging and much flip-flopping on the part of German Chancellor Angela Merkel before a joint European-IMF bailout package for Greece was announced in April. The long delay in formulating a response not only sent out confused messages about Europe’s will and ability to set its own financial house in order. It also signalled a new attitude in Germany, the country that is arguably the pivot on which the European project turns.
From the inception of the EU, a Germany wracked by war-guilt has been the motor driving integration. For Berlin, the EU has been the vehicle through which it sought to put its Nazi past behind it and legitimately act on the European and world stages.
For decades, Germany has thus played the role of the EU’s cheque book, handing over cash as and when it has been most urgently needed. Berlin’s actions this year have, however, been a clear indication that Germany was no longer willing to engage in public acts of self-denial in exchange for legitimacy.
But a more confident, assertive Germany, acting on its own perceived national, rather than European, interests has serious implications for the EU’s future. Many analysts argue the harsh austerity measures imposed on Greece and Ireland in exchange for their German-led bailouts will devastate their economies, by stunting growth further and condemning them to semi-permanent deflation.
Yet, given its dominant economic position Germany has been able to assert, some would argue impose, the view that the solution to the fiscal woes of all European countries is their Germanisation. Berlin’s insistence on a one-size-fits-all solution for euro zone countries is based on a sharp cutback of fiscal deficits, reduction of unit labour costs and an increase in exports. In short, the solution according to Germany, is for euro zone nations to recast themselves in Germany’s image.
Uncertainty ahead
For now, Berlin’s views have won the day. But whether in the long term such austerity can be tolerated by economies and cultures that are fundamentally different to those of Germany is uncertain.
This is why despite the announcement of the permanent bailout fund, as with the other temporary financial aid mechanisms set up before it, markets have failed to settle.
There are serious question marks over the technicalities of the new rescue fund, such as the role to be played by private investors. Technicalities aside, the ongoing debt crisis and the response it has engendered from the leading actors also raises doubts about the survival of the European Union itself, at least in the form we currently know it in.
In Brussels, it will be a sombre festive season this year and New Year resolutions notwithstanding, 2011 is unlikely to bring easy succour.
