As most of Britain watched Murdoch in the dock at the House of Commons Home Affairs Select Committee, the Euro countries finally agreed to bail out Greece once again with an enormous 96 billion pound loan. Immediately markets across Europe were relieved, particularly across southern Europe where the Spanish and Italian economies were teetering from Greek contagion. However; the French president Nicolas Sarkozy has said that this bailout is purely to deal with Greece’s economy and other Euro countries will not move to assist the other ailing PIGS (Portugal, Italy, Greece, Spain). Yet as Britain strictly stays on the outside and European countries head towards fiscal union, where does the European project stand?
After centuries of war and bloodshed, it is remarkable to find that the European project has been so successful in turning military hostilities into economic partnerships. A continent ravaged by war became one of the world’s most important free markets. It appeared to be the correct decision to take as well. Europe, an economy of ideas and inventions would be an ideal competitor against the US and Japan. The decades after the Second World War saw great European statesman bridging differences and pushing beyond economic matrimony to a full-scale political partnership. This was a generation that had lived or emerged from two wars that had destroyed and killed millions, the plans that were unfolding before them seemed not only possible but the only option.
However, the increasing integration of the European project hit a brick wall, literally, when the Berlin Wall came down. For fifty years, Western Europe was a bulwark against the Communist East and now with democracy sweeping across Eastern boundaries, what was Europe and the EU supposed to stand for? Germany was always central to the project and unsurprisingly leaders were concerned about a reunified superpower in the middle of the continent.
European institutions, whether in Brussels, Luxembourg or Strasbourg have fundamental issues: a weak mandate, they lack transparency and accountability, further bureaucracy and perhaps most importantly to ordinary Europeans, they don’t know what it stands for. Perhaps this was the trouble with the European project; there was an original idea and as things kept on moving along, no one questioned where it was going. Monetary union was purely a facade to continue the project and did not encompass any financial instruments to ensure its success. Politicians and cultural commentators have speculated that a single currency would ultimate fail because the EU had no fiscal powers to monitor and penalise countries. As we have learnt over the past few weeks, there was no mechanism in place to leave the Euro.
The recent financial crises occurred because of a political impasse against the European project. Each country had its own interests to bear against an increasingly frustrated national electorate. It is unsurprising; billions of Euros are being spent on bailouts, particularly Greece, when its economic affairs were in a ruinous state before it joined the currency. Why should billions be spent in on the Greek economy when they should never have been allowed in from the start. This is not a victory to the little Englanders of the right-wing press who claimed it would all end in tears from the start; their grievances were aimed at bendy cucumbers and the inability for town halls to parade the flag of St George. This was a rose-tinted view that economic union would endure culminating in further political union.
So does a two-tier Europe have a chance? That is Euro countries forming a political bloc with countries such as Denmark, Sweden and the UK on the outside. It certainly retains the status-quo, France and Germany dominating the internal politics and directing its future. Tighter regulation of finances would bring control of taxation and other macroeconomic measures in house. That would be a massive repeal of sovereignty. Yet is there a political or cultural demand for such changes? Do European people seem content to move in a closer direction? The rejection of the Lisbon treaty or European constitution would suggest no and after the recent bailouts Northern European countries would demand checklists to ensure tighter controls on the PIGS, not to mention new entrants. Yet for the Euro to survive, as it stands now, this is the safest solution.
And Britain. Although it is not part of the bailout plan, it is yet to hear the last of Europe.
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