Editor’s note: Justin Vaisse assesses the risks of seeing the European Union or the Eurozone break up because of the economic crisis. Far from this outcome, Vaisse surveys the reasons why Europe will resist and predicts that it will eventually bounce back to become a stronger union. This paper will be published by the Robert Schuman Foundation in June 2009 and will also be available in French.
Will Europe break up? In the past six months, this question has suddenly gained currency and is now being asked not just by worried and introspective Europeans, but by observers across the globe. And given the scope of current economic turbulence, there is no shortage of nightmare scenarios that could lead to that end. The Eurozone could implode under the tensions generated by this first major test to its unity, as Milton Friedman famously predicted. The common market, which remains the cornerstone of the European Union, could unravel under the wrenching pull of stealth protectionism. EU institutions could increasingly atrophy from the glaring lack of crisis leadership and the tensions generated by publics demanding purely national solutions. Eastern European member states could suffer fatal blows and revolt against the perceived abandonment of the West, while other hard hit countries – from Ireland to Greece and Latvia – could turn their backs on a European Union sold to them as safe haven.
Not so fast. While there have been a number of worrying developments caused by the economic downturn, and while this is no time to be complacent or lack imagination, there are still reasons to believe that Europe will not only survive, but may even benefit from this crisis. A case could be made that, in the final analysis, the net effect of the downturn will be to force greater unity upon Europe. Current tensions can certainly be interpreted as the first cracks of an impending break-up, but they can also be seen in a very different light – the normal and adaptive reaction of a healthy body to stress. That body may suffer as a result of the assault, and will no doubt feel miserable for a time, but, as the saying goes, that which doesn’t kill you, only makes you stronger. After all, if history is any guide, this would be nothing but a classic with respect to European construction – where a period of dire crisis is followed by a rebound and the strengthening of the EU as an ever closer union. Things go horribly wrong before they get better – but a full recovery occurs precisely because things got so bad. In other words, the events we are witnessing may foretell not so much the beginning of the end as the end of the beginning for Europe.
To assess the political implications of the crisis, it is necessary to determine first what the appropriate criteria for evaluation are, especially in terms of expectations and time period. The current threat of disintegration is so large that one could argue that simply weathering the storm would be an achievement. A second school of thought may use a maximalist yardstick: because EU leadership has been lacking on bailout coordination or help for Eastern European member states, the crisis has already exposed the union as a superficial construction built for fair weather only. In this light, even the recent innovations to deal with the crisis, like the invention of an implicit “no-default clause” for Eurozone countries, as will be discussed later, are seen as a bare minimum and an inadequate response to the challenges before us.
My position is distinct from both these schools of thought. First, while some lessons can already be drawn from the crisis, it is too soon to pass a comprehensive judgment on recent events and their impact. We still don’t know the full depth of the economic downturn, nor can we fully gauge its social and political consequences. The worst may still lie ahead for Europe. At this point, all we can offer is an assessment of Europe’s initial response and tendencies and speculate on future possibilities. Second, rather than focusing only on the shortterm implications of this crisis, my time frame for evaluation is the middle term – the next 5 to 10 years. Finally, my expectations for EU institutions are not maximalist; I do not expect that the crisis will precipitate a super-federal EU state, nor do I wish it would. I am hoping for more than survival, however, and if current tensions can bring about new instruments of solidarity, force more unity and coordination among states, and demonstrate that the institutions are here to stay, then the EU will have not only passed its first serious test but will ultimately emerge stronger as a result.