Monday, July 23, 2012

What To Do About The European Union

Since economic unrest began manifesting itself within the European Union in late 2009, the political and financial climate in the region has continuously deteriorated. Long-term interest rates have soared in the majority of countries within the eurozone, hundreds of billions in euros have been allocated in the form of bailout packages, and more than ten sovereign leaders have been unseated and replaced. With no solace in sight for Europeans, and the very real possibility of the economic crisis spreading both east to Asia and west to the United States, a global range of academics, politicians and economic experts have offered myriad potential solutions. However, it is important to consider the origins of the European Union when developing policies to relieve the current economic strain. While it may have taken decades of relative affluence and a peaceful E.U. to bring about this current crisis, the very foundation upon which the continent stands is flimsy at best, and even if the ongoing pressures let up and global fears are assuaged, that foundation will continue to be susceptible to both political and financial troubles. I do not think the solution to the crisis in Europe is further economic integration, as Chancellor Angela Merkel of Germany suggests. Instead, I see the solution as being one of less integration, and perhaps the disbanding of the European Union altogether.
The European Union was established under the title of the European Economic Community in 1958. It contained just six countries, but represented a transnational desire to foster increased economic growth in a despondent post-WWII Europe. The six founding members – Belgium, France, Germany, Italy, Luxembourg, and the Netherlands – saw the organization as the first fundamental step to increased trade in the region and therefore a greater reliance on neighboring nations. By 1993, the EEC (then comprised of twelve nations) passed the Maastricht Treaty, not only establishing open borders for the region but also effectively changing the name of the organization to the European Union. It wasn’t until 2002 that the euro came into play, when seventeen of the twenty-seven nations in the European Union phased out their old currencies and replaced them with it. The adoption of the euro – and the creation of the “eurozone” – was a major milestone for the E.U. and seen as a further step towards total integration, at which point Europe would resemble the United States more than anything else.
Since 2002, everyone has largely ignored the fundamental difference between the United States and the European Union: the former is an entity comprised of fifty individual, smaller “states,” but with all states loyal to a single, sovereign federal government. The latter, on the other hand, will never accept such a constricting force. In theory, economic integration is an excellent idea. The concept of an economic community, with one single currency and an entirely open market, is widely regarded as the highest and most efficient form of capitalism. Economic integration cannot function independently, however; political integration is paramount to the success of such a large and complex step as the introduction of one single currency to seventeen different states. But political integration was never considered as such, and the adoption of the euro was executed despite each nation retaining its largely sovereign government. The argument against this, of course, is that there is a higher body in place, governing economic aspects (as well as agricultural, international-related criminal, and environmental aspects). This is untrue. The European Commission, the highest governing structure within the European Union’s government, is small and elected by other members of the government. But conversely, the European Parliament can be equated to the House of Congress in the sense that it is comprised of 754 representatives from all twenty-seven E.U. members, who all need to find accordance on a wide variety of issues and then establish legislature based on that accordance. This happens rarely, and that is because of the dramatically differing political views across the spectrum that is European nations. Never has there been a more inefficient political body than the European Union; so many checks and balances are in place that the end result is political bedlam, with very little policy and legislature ever gaining wide majority support.
The gist of this argument is that the European Union is too diverse as it is, and further integration would be a disaster. From a financial standpoint, Germany has bolstered itself up into being an economic powerhouse, with a large industrial sector and an impressive GDP. Spain, on the other hand, is less industrial, with a vast number of its citizens employed by the government, which allots several months paid vacation each year as well as endless other benefits that would be scoffed at anywhere else in the world. One country is pulling more than its own weight, while the other practices financial policies that are simply unsustainable. Both of these countries share the some currency though.

Politically, things are even less similar amongst the countries of the E.U. For years, Finland has been governed by a far-right conservative party, which has at times expressed xenophobic sentiments and detests the open-border policies established by the Maastricht Treaty in 1993. President-elect Francoise Hollande in France, meanwhile, is a left-leaning Socialist with liberal economic policies and differing sentiments towards immigrants. Both of these countries share the same currency.
How can such a diverse and varied region be expected to agree on policies that might come with sacrifices for some but will overall benefit the community as a whole? The polarizing effects of Europe will continue to drag down those countries more economically stable, while plunging others into further instability. Politically, there can be no greater integration than there already is, and the efficiency with which the European Union governs over the sovereign nations will not increase. As I write this, Spain is accepting a new round of bailouts valued at roughly $130 billion; they can receive as much as $37 billion this month. Meanwhile, European banks are struggling, investor confidence is at an all-time low, and President Obama is gravely concerned about the U.S.’ economy becoming mired in the ongoing chaos. Instead of looking towards a future where European states have less sovereignty and the euro prevails, it is time for the states of Europe, especially in the toxic eurozone, to look towards distancing themselves from one another and perhaps even phasing out the euro altogether.

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