EU marching blindly into great unknown

stefan-auer-thumb Dr Stefan Auer

First published in The Australian on 15 June, 2010.

It was all meant to be different for Europe this year. The Lisbon Agenda adopted a decade ago promised to turn the EU into the most advanced economy in the world. It envisaged Europe catching up with, and surpassing, the rest of the world by becoming both the most economically competitive and socially just. The Lisbon Treaty, which entered into force in December last year, elevated the EU Charter of Fundamental Rights to legally binding status, promising, amongst other things, "the right to engage in work".

Shouldn't someone have told the EU's elites that Lisbon, which was meant to become a symbol of radical transformation of Europe for the better, is a city that was shattered by one of the most devastating earthquakes of modern times? The Lisbon earthquake of 1755 did not just destroy one of the richest cities of its time but, more importantly, it shattered the naively optimistic belief of an influential strand of the Enlightenment, which postulated the possibility, nay, the necessity of human progress.

Erudite Europeans who know their Voltaire are familiar with the character of Dr Pangloss, who firmly believed that we have always lived "in this best of all possible worlds". Never mind earthquakes and other catastrophes - it's all for the best.

Dr Pangloss is taking over Brussels. "Let us recall that the first 10 years of the euro have been a success story", proclaimed Olli Rehn, European commissioner for economic and monetary policy, a few days ago. The president of the European Commission, Jose Manuel Barroso, assured German readers of Frankfurter Allgemeine Zeitung that "the European social model is still the best".

"The problem is not the euro", he argued. "Iceland wants to join precisely because it views the euro as an anchor of stability".

If confirmation was needed about the euro's popularity, we've just received it: EU finance ministers last week approved Estonia's bid to become the Eurozone's 17th member at the beginning of next year.

There will be more uplifting rhetoric from Europe this week. Last night's meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy was to be all about restarting the "Franco-German engine". On Thursday, a key EU summit will reinforce its leaders' commitment to further integration. We will be told that the crisis offers a great opportunity.

Europe is always on the move. The first president of the European Commission, Walter Hallstein, likened it to a bicycle ride. This was half a century ago, but the argument remains popular among EU elites. Europeans have often faced difficulties in the past and have come through them stronger. They became even more determined to pursue their vision of an ever-closer union. Their slogan, "United in Diversity", becomes more compelling in adversity. But bicycles are so 1950s! To continue in its journey in the 21st century, the EU built a "special purpose vehicle". This is the new institutional mechanism created to bail out Greece and other countries that might yet need financial assistance.

The SPV allows Europeans to get around the legal restrictions in the Maastricht Treaty, which explicitly ban bailouts.

Instead, it is celebrated as an unprecedented act of European solidarity.

The ultimate aim of the SPV, worth more than $1 trillion, is to outwit the markets. It will make credit more expensive for countries such as Germany and cheaper for Greece. But isn't this what caused the crisis in Greece in the first place?

Are we too flippant? Whatever is unfolding in Europe now, it is not a catastrophe, or a natural disaster. Or is it? Greece has been rescued under Article 122 of the Lisbon Treaty that allows for help when a member state faces "natural disasters or exceptional occurrences beyond its control".

Yet this surely is a strange natural, or man-made, disaster. It was better predicted than any other "exceptional occurrence" one can think of. The crisis in Greece was caused by reckless spending.

Could it not be that Hallstein was simply wrong? Can't you just get off the bike?

The push towards more integration and economic governance ignores the fact that the current dire predicament was caused by a bold push towards more integration.

Europe will not be better served with more unity. It needs more realism, transparency, democratic accountability and basic economic literacy.

All these attributes are still more likely to develop in local communities and nation states rather than in Brussels.

Marching forward, never backwards. This is why there is no institutional mechanism in place to leave the Eurozone.

The Lisbon Treaty is different in this respect. It creates the explicit right in the amended treaties to withdraw from the union.

Can Europe be saved from itself only by abandoning the EU? It surely would be preferable to abandon the euro in order to save the EU.