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I admit that, years ago, I was entranced by what Jeremy Rifkin called "The European Dream," which was not just a monetary union but, in his mind, a political union that could, unlike the United States, expand almost without limit to include an ever widening periphery, someday stretching as far south as northern Africa.
While nothing has theoretically changed since I met Rifkin back in 2004, such rhetoric seems silly now. The center of the European Union is now less than willing to help the current periphery hold on. Fevered talk about countries seeking to join the EU has been replaced with fevered talk about countries potentially leaving it, an event not planned for during the EU's formation.
My headline here is deliberately provocative. I think that a strong EU has a lot to offer the world. But I wonder what it has to offer the peoples of Greece, Spain, Italy, Ireland and Portugal at the moment. It's also true that rhetoric can swing wildly in a couple of years. Give us a global boom and we'll be hearing about countries clamoring to join the EU again. Remember, most of the EU countries in debt trouble now are only there because of the recession. Ireland, Portugal, and Spain were in fine shape heading into the recession. Italy was not in great shape but its deficits were falling -- it was just a few more year to great shape. Greece was... well... Greece got bamboozled by foreign bankers and its own elite.
Martin Wolf at The Financial Times has been one of the best advocates for having the EU save itself, possibly by issuing Eurobonds and by having the European Central Bank become a true lender of last resort, in the manner of the U.S. Federal Reserve. But even Wolf scares me when he says things like this:
"I fear that austerity without end will bring about a return to the unstable populist politics the European Union was designed to prevent. That could shatter the eurozone and, with it, the EU, thereby ending the most successful attempt to build peace and prosperity in Europe since the fall of the Roman Empire."
Now, I get what Wolf is saying. The unstable politics of Europe are directly responsible for the travesties of the 20th century, from World War I right on through the break-up of Yugoslavia. I get that when he uses the word "populist," it's not the same thing as a union driven recall election in Wisconsin.
But, then... and this is what Jeremy Rifkin (who was an adviser to the EU before the adoption of the euro, right alongside the conservative economist Robert Mundell, who advocates for a one world currency) failed to grasp: Spain is not to Germany what Wisconsin is to South Carolina. The various states within the U.S. are culturally, economically and politically more in tune with one another than the various member countries of the EU. The union of states has a lot more to it than currency.
To be fair, Rifkin always knew this. His vision of an ever-expanding Eurozone was based on the will of people to assimilate and to accept one another. The current Eurozone countries can get there. But I kind of wonder whether or not they're ready. The U.S. is a young country but if you judge it by uninterrupted democracy (heh, I know, laugh with me about that) then it's an old one compared to Ireland, Spain, Italy, Germany or Greece, which have all dealt with dictators, monarchs or foreign conquerors, within recent memory.
I wonder whether or not these democracies have had time to truly form before they bequeathed so much authority to super-national financial authorities. In a sense, the U.S. deals with these same tensions with regards to its international trade agreements. But, the U.S. has military weight and a reserve currency to throw around. I imagine that in Greece a sense of helplessness and paranoia would be a natural reaction to current events.
Not all populism is a bad thing. Argentina's decision, in 2001, to depeg its currency from the dollar and to tell the vulture speculators that had purchased its debt at deep discounts to take a hike, was quickly rewarded by a return to growth. More recently, Iceland performed the same trick.
The Eurozone will return to growth again someday. Fortunes don't reverse quickly on this scale, but they reverse dramatically. At some point in the future of Dag, when we are all justly famous for our insights, we'll be discussing whether or not the Democratic Republic of Libya can conform to standards of European cosmopolitanism. But, for now... if the Euro cannot serve the interests of the people of so many Eurozone countries, it must shrink. Populism is not always scary.