European Disunion (ED)

By Shlomo  Maital  

 

 cat vs mouse

 

Northern vs. Southern Europe

European Union? Alas, it has become the ED European Disunion.  Don’t believe just me.  Here is what Clyde Prestowitz, Foreign Policy blogger and former chief trade negotiator for Ronald Reagan, observes:

I was wrong, and I have come to realize that my dream of a united Europe a la  the United States, is not the European dream. Indeed, with great disappointment I have at last concluded that there is no European dream because a las those whom we on the outside call Europeans are not and don’t want to be Europeans.

  What is going?  According to Prestowitz:

I spent part of last weekend with a group of leading intellectuals from various European countries. The Germans were firm in their conviction that the primary cause of the EU crisis is the laziness, profligacy, free rider attitude, and mendacity of the so called Peripheral Countries ( Spain, Portugal, Ireland, Italy, Greece, and even maybe France), especially Greece, Portugal, and Spain. They emphasized that Germans believe in paying their way, in spending prudently, saving, investing, producing, and maintaining sound money and strong currencies. They attributed Germany’s economic success of the past decade wholly to the dedicated pursuit of these virtues. Conversely the problems of the others were blamed largely on their failure adequately to observe the German virtues. Did they realize that Spain’s government budget deficit and debt as a percent of GDP had been less than Germany’s? Yes, in some cerebral way in their heads they did, but not in their gut. Did they realize that the German banks had been major lenders to and facilitators of the peripheral real estate bubbles whose collapse precipitated the crisis? Again, yes, but only in a kind of theoretical way. There was clearly no conviction that that was a primary cause of the problem or that keeping the German banks whole might have been an on-going drag on the recovery of the peripheral countries. Was there any understanding that for Germany the Euro is actually undervalued (compared to what a free standing Deutsch Mark would be valued at) and that much of Germany’s export success is due to that? Absolutely not. No, Germany’s success was seen as entirely due to hard work and financial virtue.

  The Northern European cats are treating the Southern European laggards as mice.  Not how a true Union should work.  The solution of the Northern Europeans to Europe’s problems is simple. More austerity for the bums in Southern Europe.

   My companions saw the solution very much in terms of continued enforcement of strict austerity and achievement by the peripheral countries of fiscal and trade surpluses by dint of reducing wages, employment, and costs. None of them were interested in achieving a European banking union or any other kind of arrangement that would result in German money being used to support Europe-wide obligations.

    I’m afraid it is time to write off the European Union.  No, the euro itself will survive, although in a slimmer form, as some of the 17 euro nations depart.  And many believe the UK itself will leave the EU in a couple of years.   But European Union?  A great opportunity has been lost.  A grand experiment has failed.  The world as a whole will lose greatly. 

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