The Erosion Of Europe

joschkaJust weeks ago, the worst of the financial crisis in Europe seemed to be over. Stability seemed to be returning. But appearances proved to be deceptive. A minor problem (at least in scale) like Cyprus, when combined with an almost unbelievable degree of incompetence among the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund), was enough to turn a molehill into a mountainous crisis.

While markets remained calm, the Cyprus crisis revealed the full extent of the political disaster that the eurozone crisis has wrought: the European Union is disintegrating at its core. Europeans’ current crisis of confidence concerning Europe is far more dangerous than renewed market anxiety, because it cannot be overcome with another liquidity injection by the ECB.

Europe’s old political order was based on competition, mistrust, power rivalries, and, ultimately, war among sovereign states. It collapsed on May 8, 1945, and was replaced by a system based on mutual trust, solidarity, the rule of law, and compromise. But, with the crisis eroding these foundations, trust is giving way to mistrust, solidarity is succumbing to ancient prejudices (and even new hatred between the poor south and the rich north), and compromise is being overwhelmed by diktat. And Germany is once again at the center of the process of disintegration.

That is because Germany, by far the EU’s strongest economy, has enforced a strategy for overcoming the eurozone crisis that worked for Germany at the beginning of the millennium, but under completely different internal and external economic conditions. For the distressed southern European states, the German-backed mixture of austerity and structural reforms is proving fatal, because the decisive third and fourth components – debt relief and growth – are missing.

It is only a matter of time before one of the large European crisis countries elects a political leadership that no longer accepts the austerity diktats. Even now, come election time, national governments more or less openly promise to protect their citizens from Europe, because Germany has seen to it that austerity and structural reforms take pride of place in managing the crisis.

The argument that “tough love” was necessary in southern Europe, because nothing there would ever have changed otherwise, has been settled. The love has been very tough indeed, generating rapid economic contraction, massive unemployment (upwards of 50% among young people), and continued fiscal deterioration, owing to rising debt-service costs. Indeed, all eurozone members are now experiencing weak economic growth, if not recession.

What does Germany want? A German Europe would never work, and the country’s political class lacks both the courage and the determination to pursue a European Germany. So, does Germany want to hold together the monetary union and thus preserve the EU, or will it allow dithering and a lack of vision to hasten the erosion of Europe’s foundations?

In this crisis, intention takes a back seat to action (or lack thereof). The International Herald Tribune recently quoted Winston Churchill: “It’s not enough that we do our best; sometimes we have to do what’s required.” That is precisely the order of the day in Europe and the eurozone.

What needs to be done has long been clear. The price of the monetary union’s survival, and thus that of the European project, is more community: a banking union, fiscal union, and political union. Those who oppose this because they fear common accountability, transfers from rich to poor, and a loss of national sovereignty will have to accept Europe’s re-nationalization – and thus its exit from the world stage. No alternative – and certainly not the statusquo – will work.

It has become common knowledge in Europe that the ongoing crisis will either destroy the EU or bring about a political union, and that, without a solidarity-based solution to existing debt and a partial mutualization of new debt, the euro cannot be saved. Such steps will make far-reaching transfers of sovereignty unavoidable. Is Germany – or France – willing to do that?

The real crisis of the EU and the monetary union is not financial but political – or, more precisely, it is a leadership crisis. A lack of vision, courage, and strength of purpose is on display in all European capitals, but especially so in Berlin (and on the part of government and opposition alike).

Europe’s national politicians routinely criticize the EU for its lack of democratic legitimacy, yet they bear part of the responsibility for it. Or have pro-Europeans become so faint-hearted and dejected that they prefer simply to hand over the reins to anti-European populists and nationalists? That would be a disaster, because the crisis now runs too deep to be resolved by technocratic means.

Germany is preparing for a national election in which – much like in last year’s French presidential election – the European crisis is to play no part, or at least only a minor one. Both government and opposition believe that it would be better to tell the people the truth concerning the most vital question of the day only after the election (and in measured doses).

Such an outcome would make a mockery of democracy. But things may turn out very differently if the dynamics of Europe’s crisis throw German politicians’ plans into disarray. An unpleasant surprise cannot be ruled out; at this point, it might be Europe’s greatest source of hope.

© Project Syndicate

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  1. Sharloch says

    A debt derived from fiat money is only a paperwork masturbation. Just as money are created from thin air, so can debt evaporate from the books. The tangible property is disproportionately less than the book figures. It is all paper fraud, and so by the same means we can find ways to erase the debt and rebalance the books. Money cannot be made from thin air by private corporations. If the money supply should service our economies, than they must be controlled by democratic governments and not by private cheaters.

  2. says

    “Europe’s national politicians routinely criticize the EU for its lack of democratic legitimacy, yet they bear part of the responsibility for it. Or have pro-Europeans become so faint-hearted and dejected that they prefer simply to hand over the reins to anti-European populists and nationalists? That would be a disaster, because the crisis now runs too deep to be resolved by technocratic means.”

    I do invite the author to read my comment I posted elsewhere on this site:

    and the article I referred to in my comment:
    “The demo version of ‘kratos’: the sad moment when the totalitarian United States of Europe (USE) was born”

    In addition, I add here another comment to provide more details on the reality vs the myths, as it seems, we do need to perform a profound reality check as to what’s going on within the EU before it all gets out of hands. It is hard to believe – but evidently is the case – that no one – not even among the knowledgeable – seems to be aware: the EU is ALREADY the USE – it has been so since the end of 2007!

    Also: it should be quite evident what Germany wants. As it is revealed by the records the Danish ex-MEP Bonde provided, Merkel was part of the secret committee who decided to reintroduce the discarded EU Constitution in secrecy and in a disguised, unreadable form, aka the Lisbon Treaty.

    Indeed the leaders of the member states bear a certain “responsibility” of being bullied into ratifying the Lisbon Treaty without reading it, but that fact is just another manifestation of the tough intimidating sort of EU-love.

    To call a country’s government “nationalist” because it is gradually waking up from the EU-deception, and attempts to save its country from being colonised by the Eurocrats, is the same as calling a father a nationalist who attempts to save his house and family from intruders.

    I followed every detail of how this new Lisbon-constitutionalising process was unfolding, and how those states who attempted to stay independent were receiving sanctions by the EU. It was only Ireland whose national constitution explicitly required referendum for ratifying the Lisbon Treaty.
    Yet, right after the NO outcome of the Irish referendum was announced, Barroso in a live BBC program, personally offended by the Irish rejection, declared the decision of the Irish people insufficient to stop the grand Lisbon process. I have seen the respective BBC program.

    I am fully aware that the above FACT (not myth), has been explained away by similar fallacies and rationalisations shifting the blame onto the EU-states, but it doesn’t work, and won’t work in the long run.

    Even for the UK it won’t work as its citizens already realised that the main tension is not among the EU states forcefully integrated, but between the illegitimate political bodies and the affected country’s citizens.

    Just like the trick “the EU is democratic because we label it so” won’t work either. Democracy has an objective definition that the EU has violated on multiple counts and it is continuing doing so. (See my article)

    Dictatorship can only for a while can be masked as democracy. Thus we are rapidly approaching a crossroad when the choice has to be made between a democratic revision of this process by referenda in all EU states without the intervention of the EU, or the EU openly revealing its face. The latter is actually forecast – in written form – in the Lisbon Treaty, in which the EU authorises itself to defend the federal government against its citizens by a KGB-like international agency and by military control, which by itself defines a dictatorial regime.

    (Note, I am one the few who actually read the Lisbon Treaty.)

    Finally, it is a fact that the UNELECTED Commission is de facto the ultimate decision making body, which is yet another proof of its dictatorial nature.

    For anyone who doubts my words, I suggest to read the Lisbon Treaty, and to collect facts on the Lisbon process. The MYTH is not behind Euroscepticism but what the mainstream media communicate.

    The very fact that even the intellectual sphere is unwilling to read the Lisbon Treaty, that they remain in total apathy regarding the blatant anti-democratic nature of the EU, and their overall willingness of rationalisation of these facts, raises much graver concerns than the euphemistic, elegant term “Euroscepticism” can ever describe.

    I kindly thank you in advance for your attention.

  3. says

    The real reason for the eurozone’s falling growth and competitiveness is the ever growing burden of red tape and EU bureaucracy. While Europe contracts, Asia expands, cut the EU regulations?

    • says

      This is indeed a very good point. I recommend another source to consider:

      “In Europe cross-border capital flows are seen as culprits of the crisis but not all of them were for speculation. The level has plunged since 2007 and it’s simply foolish to think that governments can fill this breach. However, big European companies have over €1tn in cash but they are inclined to invest in emerging markets.” Source:

      For what George Soros shared with us on the same as above, see:
      Confessions on the real reasons of the global crisis: Everybody knows?

      It is econ 101 to realise that withdrawing the astronomical funds from Europe and investing them into Asia, results in the recession of the former and expansion of the latter.
      This is how unregulated global capitalism backed by the EU resulted in Europe’s recession – compared to the effects of the mega-investors’ manoeuvres. the housing crisis is just the icing on the cake.

      It is another econ 101 fact that austerity measures only worsen any recession, yet this is the policy consistently and centrally enforced by the EU in the member states. Why? Austerity measures weaken the member states thus put them into the position of colony-like regions within this new EU-empire. Only helpless masses can be governed centrally over large areas. A strong economy and welfare state is a side-effect of democratic governments and honest political polices defending local interests and reinvestments into local production. The EU is however the Machiavellian catalyst of global unregulated capitalism that will inevitably leads to impoverishment of the vast majority and will take us into a Hunger Games kind of new feudalism.

      I very much recommend for everyone at least to watch and evaluate the video at: (it speaks volumes regarding the nature of the EU):
      The demo version of ‘kratos’: what’s the use of the USE (United Sheep of Europe)?

      This article puts the ambitions of the USE in a global context:
      “The only way out of the crisis: a realisable short-term alternative to the dreaded M-word”

  4. says

    Since my second comment that I posted as a reply to another commenter was deleted, it is apparent that censorship, self-censorship, fear and intimidation are also existing elements of this EU-dictatorship. My comments can be debated, and if anyone can refute my arguments and inferences, I would welcome them, but if my thoughts – which I presented here after a long, extensive research since the end of 2007 in a global context – aren’t even read, how in the world shall we ever discuss what’s really going on with us, around us?

    If the EU would be a democratic organisation, it would face and stand all criticism, it would be an accountable and transparent organisation, then it would NOT consistently impose a policy that pushes its citizens into deeper poverty while allowing the billionaires get richer, it would apply policies to increase local production, etc.
    Then you Sir, would NOT be afraid to allow my comment to appear here, with the source showing how and why the production within the EU is decreasing since the USE was founded. Then this secretly founded USE would be responsive to its citizens, and, in the first place, it would have been founded ONLY upon the knowledge and consent of its citizens.

    To delete my comments here, Sir, will not solve any problems, it will only deepen them.

    And this remains one of the central points: to call the EU-states “nationalist” when they dare to defend their own citizens’ interests and social welfare against the merciless imperial ambitions of the international political elite is the worst betrayal of the principles of democracy and freedom, it is a gross betrayal of the former generations who gave their life for our democracy, freedom and prosperity, and it is an equally grave betrayal of the next generations who would expect us to do the same for them.

    We are facing the gravest historical issues since the second world war, thus it would be about time to realise this fact and start to act, before it’s too late. Yet, no one even tries to move a little finger. One thing is for sure, Sir, our children and grandchildren will NOT remember this generation as one with a spine, morals and integrity.

  5. says

    Herr Fischer:

    – ALL reputable economists said the euro could not work without political and thus financial union. The EU and key European leaders IGNORED this totally.
    – Successive national leaders and the EU have both secretly and recently admittedly pushed for this: one indication of this being the creation of the euro against all economic sense.
    – NOT ONE SINGLE European citizen has voted for this.
    – This policy has brought ruination to much of Europe.

    Conclusion: The attempts of successive goverments (including “heroes” Monnet, Kohl etc etc) have behaved in a quasi-fascist manner and should be locked up for “reckless and unmandated use of public money”and the EU.

    There is not a lot more to say.

  6. Mark says

    it was Mr Fischer and Mr Schroeder who abolished the German social protection network when they where in government

  7. NewCarl says

    Germany has long made a mockery of democracy.

    In fact a true, functioning doesn’t exist any-more in Germany

    Most Germans have now become anti-Eu, and anti-Euro, yet we are governed and will continue to be governed by a group of parties who are fervent supporters of EU and the EU. And this is just one example for the huge gap between the political establishment and the common people.