Category: Business

“The twenty-first century may yet belong to Europe.” Thus said the late Tony Judt, author of a widely praised history of Europe after the Second World War. Historians are not necessarily prophets, and our century has a while to go, but the prospects of such a future coming to pass are not brilliant at present. Tony Judt was in good and numerous company at the time, in America even more so than on the Continent, and the reasons for such misplaced optimism (which has now quite often given way to panic) will no doubt be studied in the years to come.

Some five years ago in a book entitled The Last Days of Europe I dealt with Europe’s decline—and was criticized for my pessimism. And yet I now feel uneasy facing the apocalyptic utterances of yesterday’s Euro-enthusiasts. For even if Europe’s decline is irreversible, there is no reason that it should become a collapse.

At a time of deep, multiple crises in Europe it is too easy to ridicule the delusions of yesteryear. The postwar generations of European elites aimed to create more democratic societies. They wanted to reduce the extremes of wealth and poverty and provide essential social services in a way that prewar generations had not. They had had quite enough of unrest and conflict. For decades many Continental societies had more or less achieved these aims and had every reason to be proud of their progress. Europe was quiet and civilized.

Europe’s success was based on recent painful experience: the horrors of two world wars; the lessons of dictatorship; the experiences of fascism and communism. Above all, it was based on a feeling of European identity and common values—or so it appeared at the time. Euroskeptics suspected it was simply a community of material interests; it began, after all, as an iron, steel and coal union. Jean Monnet, the father of the European Union, saw the dangers ahead. He later said that he would have put the emphasis on culture rather than economics if he had to start all over again.

When did things start to go wrong? It would seem the immediate crisis is certainly one of sovereign debt, of common currency and of other financial issues. It was no doubt a mistake to believe that an economic union could be established in the absence of a political one. And yet, did the current crisis perhaps happen because the European idea (meaning the welfare state), the basis of the scheme, was eroded?

With all its importance, the economic crisis is only part of our sad story—and probably not even the decisive one. For the present debacle is also one of an apparent lack of a common European identity and values, of national interests prevailing over a shared European interest. It is a crisis of lack of solidarity, leadership and—perhaps above all—political will. It is a crisis of internal tensions, of failed integration at home (as shown, for instance, by recent events in Britain). For many years European elites lived in a state of denial; they wanted more democracy but were unprepared for the erosion of authority that led to anarchy.

To a considerable degree, the political elite, the media and public opinion became oblivious of the darker aspect of domestic politics. They largely ignored the growing disparity in income and the effects of youth unemployment. Those preoccupied with foreign affairs had grown up (as British diplomat Robert Cooper put it) in a belief in peaceful interdependence and modern cooperation, whereas the policy of the rest of the world was rooted at best in ideas of traditional spheres of influence and balance of power. And meanwhile public opinion gradually moved away from erstwhile belief in Europe.

Such false optimism and the subsequent collapse of illusions was bound to lead to dejection. Did Europe still have a future, would it still exist a decade or two from now? Or would it revert to what it had been before—a mere geographical concept? One is reminded of Prince Metternich’s famous letter to the Austrian ambassador in Paris (and later also to Palmerston) in which he said that while “Italy” was a useful geographical term it had no meaning or reality as a political concept. True, at about the same time Carlo Alberto Amadeo, king of Sardinia, in an equally famous aside said Italia fara da se (Italy will take care of itself). One hundred and fifty years later (and considering the present state of Italy) it is still not certain whether Metternich was right or the Sardinian king. The present state and future prospects of Europe are not dissimilar to those of nineteenth-century Italy.

Many Europeans complain about a lack of democracy and they fear, rightly perhaps, that a Europe dominated by Brussels would be even less democratic. But to survive the Continent needs leadership. How much democracy could there be in this Europe of tomorrow? Some Asian political philosophers in Beijing as well as in Singapore have been advising us that the Asian, more authoritarian model will be more suitable (and efficient) to confront the tasks of the years to come.

There are, broadly speaking, three potential scenarios as far as the future of Europe is concerned. Only the very brave will predict at this time which one will be chosen by the Europeans—or to which they will sleepwalk. The European Union may break up, wholly or in part within a few years. The stronger economies will stick together, renegotiating a new framework. The weaker ones will be excluded. They will find it very difficult to face the future with its increasing imbalances and the danger of protectionism on their own. Perhaps they will be loosely united in a second union, hoping that after a while they will be promoted again to the championship league—to borrow a concept from the world of European soccer. The future of the Euro is uncertain; it may survive the present crisis, but what about the next? There is no willingness for now proceed towards political unity, but it is even more difficult to imagine a return to the fragmented Europe of pre-EU days.

The second scenario: A recovery from the present crisis, quickly, or more likely, over time. Such recoveries have occurred in the past. Thirty years after its defeat by the Germans in 1870­–1, France had recovered its confidence. It took Germany less than twenty years after its defeat in World War I to emerge as the strongest power (and greatest threat) in Europe; it took the Russians even less time to resurface after the demise of the Soviet Union.

But what could provide the impetus for such a miraculous recovery? A major, existential crisis generating a feeling of urgency and the conviction that basic changes are needed. Yet at present there are few indications that a new dynamism will prevail over European exhaustion and listlessness (aboulia in the language of an earlier period of psychiatry). Given its demographic weakness, Europe will need immigrants. But its experience of late in this respect in has not been a happy one. It is unlikely to produce the push needed to shift the Continent in a new direction. A profound change, surprising even the confirmed skeptics, is, I suppose, possible—but it involves a tremendous deal of hope.

Lastly the scenario most likely to happen and least likely to succeed: a bit of reform and a bit of business as usual. The richer countries will help the poorer ones to muddle through. It may work this time, but it is unlikely to be sufficient to deal with the next crisis. Even if it will be ready to act decisively, northern Europe may not be strong enough.

To opt out of Europe would be very costly, even more costly than staying in. For this reason the present uneasy situation is likely to continue for a long time: a big-but-not-very-happy family, constantly bickering and complaining that their national interests are not taken into account, incapable of coordinating their domestic policies, let alone having a common defense and foreign policy. Kicking, screaming and threatening, individual countries will in the end not leave the fold. This allows for survival, but certainly not for a civil and moral superpower, the great model for all mankind in the twenty-first century.

But how to ensure that Europe’s withdrawal from the top league of great powers will be relatively painless, a soft landing rather than a crash? There is no magic prescription except commonsense behavior.

Psychologically, such an adjustment to a reduced state in the world may not be easy. Having been accustomed to being strong and influential, it may be difficult to give up old habits. Ambitions will have to be reduced. Europe will have to stop preaching to the world about human rights, freedom and democracy. As the Chinese foreign minister told his colleague from Singapore—we are big and you are small and you ought to behave accordingly.

The outlook is bleak. But it is also true that nil desperandum, never say die, is a better guide to action than the violent changes in mood about the future of Europe that we have witnessed over the years resembling the convulsions on the stock markets.

nationalinterest.org/commentary, August 16, 2011