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Disintegration via monetary union
Author: Tom Gallagher

Cooperation and trust were increasingly scarce commodities in the inner councils of the EU. This book explores why the boldest initiative in the sixty-year quest to achieve a borderless Europe has exploded in the face of the EU. A close examination of each stage of the EU financial emergency that offers evidence that the European values that are supposed to provide solidarity within the twenty eight-member EU in good times and bad are flimsy and thinly distributed. The book aims to show that it is possible to view the difficulties of the EU as rooted in much longer-term decision-making. It begins with an exploration of the long-term preparations that were made to create a single currency encompassing a large part of the European Union. The book then examines the different ways in which the European Union seized the initiative from the European nation-state, from the formation of the Coal and Steel Community to the Maastricht Treaty. It focuses on the role of France and Germany in the EU. Difficulties that have arisen for the EU as it has tried to foster a new European consciousness are discussed next. The increasingly strained relationship between the EU and the democratic process is also examined. The book discusses the evolution of the crisis in the eurozone and the shortcomings which have impeded the EU from bringing it under control. It ends with a portrait of a European Union in 2013 wracked by mutual suspicions.

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Routes away from crisis
Tom Gallagher

Germany has risen to assume the leadership of the EU. Although it enjoys immunity from the pain of much of the rest of the eurozone, the future of the single currency and perhaps of the wider Union itself seems largely to be in its hands. For much of the crisis, Germany has wished to direct Europe's financial affairs through a form of eurozone governance that primarily benefits Germany irrespective of the damage done to a mounting list of eurozone countries unable to insulate themselves from it. Europhile leaders may have pioneered a European unification concept in the 1950s which gave the EU momentum until the end of the Cold War. But financial crises from that of the Balkans in the early 1990s to the extended financial one have revealed how deep its limitations are in carrying out its own projects or resolving difficulties arising from chronic design faults.

in Europe’s path to crisis
Tom Gallagher

This chapter offers a portrait of a European Union in 2013 wracked by mutual suspicions. Elites in that year dropped the pretence that further integration efforts could produce common benefits. The EU had devised such defective processes for managing high-level responsibilities that it remained paralysed when these low-grade forms of management spun large areas of the eurozone into crisis. Southern European political elites shrank from embracing bold remedies for the economic crisis. Most were seen as involving an abandonment of the euro or else a temporary suspension for some members, or a breaking up of the currency union into several workable parts. The EU will become an entity of secondary importance unless it can redesign itself as a force concerned to identify and defend a European common good. This involves burying the Cold War with national states who view a supra-national Europe as both threatening and unworkable.

in Europe’s path to crisis
Tom Gallagher

The single currency was overtly designed to lock a newly united Germany into a common monetary union in which it would act in concert with countries possessing less powerful economies rather than dominate them outright. This chapter focuses on the evolution of the crisis in the eurozone and the shortcomings which have impeded the EU from bringing it under control. The financial sector had not become a protected zone of the eurozone overnight. Ever since the passing of the Single European Act in 1986, its perceived needs had come to shape the concerns of EU decision-makers to an increasing degree. EU decision-makers at the centre of a marathon economic crisis are increasingly insistent that there is no way out except for a union adopting full political and economic standardisation.

in Europe’s path to crisis
Tom Gallagher

A primary goal of the EU has been to promote a popular sense of European consciousness so as to enable allegiances to shift from individual nation-states to a European centre. This chapter examines the difficulties that have arisen for the EU as it has tried to foster a new European consciousness. The political system of the EU will be truly fortunate if it is able to devise institutions which possess a fraction of the legitimacy enjoyed by the various pillars of Swiss group identity. The EU's role as a collective sustainer of constructive nationalism appeared very threadbare as the post-2009 financial crisis gathered pace. The European cause found it hard to draw on the resources of allegiance and identity commonly available to many nations during periods of difficulty.

in Europe’s path to crisis
Tom Gallagher

One of the chief casualties of the extended economic crisis in the EU has been democratic politics. The EU's own mechanisms for decision-making have been set aside at particular moments; a core group of countries has assumed responsibility for crisis management. This chapter examines the increasingly strained relationship between the EU and the democratic process. It argues that ethical standards and competent decision-making are becoming casualties of the democratic deficit. The crisis which rocked the EU at the end of the 1990s briefly brought to the surface the view that the then thirteen-member EU was divided on a North-South basis in its attitude to public morality. The European Parliament, briefly emboldened by having taken resolute action against abuses inside the Commission, slumped back into torpor despite acquiring some increased powers as a result of the Maastricht Treaty.

in Europe’s path to crisis
The triumph of ideology over good sense
Tom Gallagher

Among some of its most fervent advocates, European Monetary Union was meant to bring about the final merging of European destinies into a common political entity. This chapter explores the long term preparations that were made to create a single currency encompassing a large part of the European Union. It shows how the impetus was essentially political, to erode the power of the nation-state and speed up the installation of a supra-national alternative through hurtling towards monetary union. For most of the existence of the European Union, the push towards integration has involved political leaders trying to achieve common ground around a uniform monetary policy for Europe. The euro was exposed as top-down political project in the hands of politicians, functionaries and lobbyists who had lost touch with some essential aspects of political reality. From 2009 onwards, the limitations of the euro were exposed by a deepening financial crisis.

in Europe’s path to crisis
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The EU’s odd couple
Tom Gallagher

This chapter focuses on the role of France and Germany in the EU. Both states have often exercised dominance at key moments and have collaborated to drive the integration project forward. Converging Europe has been a story about how these two national giants determined the extent to which their core interests could be reconciled with advancing the European project. Konrad Adenauer had never been an enthusiastic German in the political sense even before the disastrous advent of Hitler. From Charles de Gaulle to Jacques Chirac and Nicolas Sarkozy, French strategy towards the European Union was too often based exclusively on ways of extracting national advantage from Europe or else promoting the personal agenda of a head of state enjoying semi-regal powers. The blows directed against the cause of building an EU with strong economic and political authority by France were harder ones than those mounted by any Eurosceptics.

in Europe’s path to crisis
Tom Gallagher

This chapter examines the different ways in which the European Union seized the initiative from the European nation-state, from the formation of the Coal and Steel Community to the Maastricht Treaty. Robert Schuman, the French Foreign Minister, unveiled a plan to modernise coal and steel production and form an economic 'community' to that effect, one which embraced Germany. The key departure was that, under Maastricht, every member state, except Britain and Denmark, in principle relinquished its long-term right to make its own monetary policy. It was agreed to create a European Central Bank to take the lead in managing a new single currency that would replace national currencies. The European Parliament was unable to call it to account after 2009 when it flouted the Maastricht Treaty by organising successive bail-outs of insolvent bank.

in Europe’s path to crisis
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Tom Gallagher

This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book explores why the boldest initiative in the sixty-year quest to achieve a borderless Europe has exploded in the face of the EU. A close examination of each stage of the EU financial emergency offers evidence that the European values that are supposed to provide solidarity within the twenty eight-member EU in good times and bad are flimsy and thinly distributed. The book aims to show that it is possible to view the current difficulties of the EU as rooted in much longer-term decision-making. It examines the different ways in which the European Union seized the initiative from the European nation-state, from the formation of the Coal and Steel Community to the Maastricht Treaty. The book concentrates on the role of France and Germany in the EU.

in Europe’s path to crisis