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.
-quarter in the previous four years. 3 As for the eurozone, its unemployment level had reached 12 per cent and its gross domestic product in the second quarter of 2013 was 3 per cent below its precrisis peak. 4
Short of pouring on to the streets, it is hard to see how populations, confronting an alarming future over subsequent decades, can bring meaningful pressure to bear on decision-makers, who in practical terms rarely show empathy with the plight of the millions of casualties of the crisis. Crisis summits have succeeded one another, involving people with big jobs
disadvantage millions of others.
The formation of a single currency was portrayed as a seminal event. It was supposed to be the culmination of a series of top-down efforts to forge an embryo European state, one shaped around deepening economic integration. But it turned out to be a policy error as monumental as any which could be associated with imprudent national democracies. By the end of its first decade in existence, the eurozone had shown itself to be a collection of different currencies pretending to be a cohesive monetary union. Its political architects had shrunk
, not just the biggest ones.
The Commission was on the sidelines when, on 16 March 2013, the fateful decision was taken to confiscate a proportion of the savings of depositors in Cypriot banks in order to raise funds to rescue Cyprus. Early in the eurozone crisis, bank deposits had been guaranteed across the eurozone so that citizens would not be compelled to move funds from country to country. Outrage in Cyprus and incredulity across much of the world led to the raid on savings below €100,000 being annulled. But it was now clear that there was influential backing
cooperation’ in specific areas; and a Europe that ‘protects’ its citizens (reforms of the posted workers’ directive) and its industries (from Chinese assault, notably). The most ambitious EU proposals related to the governance of the euro-zone. Macron argued in favour of the creation of a euro-zone super-minister, with a separate dedicated budget, and the transformation of the European Security Mechanism into a fully pledged European Monetary Fund, all to be supervised by a new euro-zone parliament. These positions were a powerful restatement of French preferences: namely
economies, institutions, banking laws, fiscal policies and national cultures.
A serene economic future was thought to be much likelier inside the eurozone than outside. This is why countries which struggled to meet the fiscal requirements for entry were nevertheless keen to join. They were prepared to surrender powers which modern states had always used to extricate themselves from economic crises – control of interest rates and the ability to devalue their national currencies in order to boost economic competitiveness. The supervision of the new currency was given to
by the clash of rival economic moralities. Within Germany, there was an impressive united front publicly affirming that fiscal consolidation or belt-tightening was the only remedy for economic competitiveness. Other creditor countries in Northern Europe endorsed such a view. But public opinion in countries across the north Mediterranean, from Portugal to Greece, challenged policies which seemed designed to plunge them into a downward spiral of depression. Many economists, watching how the debt of the eurozone periphery continued to grow in proportion to national
Commission substituting for a venerable monarchy or a heroic republic.
A lengthy financial crisis – which initially was dismissed as a temporary crisis of liquidity affecting several unimportant eurozone countries, only to turn into a systemic emergency exposing the disfunctionality of the currency union in fundamental respects – has undermined faith in the EU’s more vaulting goals. Effective common responses to the crisis have eluded EU decision-makers. As capital has fled homewards from stricken countries like Spain, Greece and Ireland in a desperate search for
the EU’s strategic goals. Largely with taxpayers’ money, banks have been re-financed in order to buy government bonds and preserve the illusion of underlying financial stability. Along the way, certain policies have been jettisoned after their soundness was previously proclaimed by leading European officials, usually without much explanation or even attempts to obtain the confidence of the wider public. By the autumn of 2011, the core EU states were prepared to intervene in the internal governance of some of the most troubled eurozone members in order to assert
economic concerns were a selling point for the public they were additionally a reflection of New Labour’s internal debates about the relative merits of staying out or joining the eurozone.
The second factor has historic roots in the strategies Britain’s leaders have used to generate support for their European policies. Blair was well aware that in the realm of foreign economic policy, and especially controversial initiatives such as this, any argument for the EU had to be couched in terms of the national interest, in this case the national economic interest. On