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What if Europe Fails?

Thomas Wright

Editor’s Note: This article originally appeared in Summer 2012 issue of The Washington Quarterly.

The European Union is engaged in a ferocious political, diplomatic, and economic struggle to preserve the future of the single currency, the euro, and the viability of what has become known simply as ‘‘the project,’’ namely the process of integration that has been the bedrock of Western European politics for over half a century. It is distinctly possible that its members’ efforts may fail, either in the short or long term, and give way to an era of disintegration. Some have sounded the alarm: German Chancellor Angela Merkel famously remarked, ‘‘If the euro fails, Europe fails.’’ Former president Nicolas Sarkozy of France predicted, ‘‘If the euro explodes, Europe would explode. It’s the guarantee of peace in a continent where there were terrible wars.’’ Polish Foreign Minister Radek Sikorski warned the euro’s collapse could cause an ‘‘apocalyptic’’ crisis. Harvard economist Dani Rodrik cautioned ‘‘the nightmare scenario would…be a 1930’s-style victory for political extremism.’’ After all, ‘‘fascism, Nazism, and communism were children of a backlash against globalization.’’ The erosion of democracy in Hungary and the rise in support for populist parties in Greece, the Netherlands, Finland, and France appears to some to be the beginning of the end.

Yet, verbal warnings from nervous leaders and economists aside, there has been remarkably little analysis of what the end of European integration might mean for Europe and the rest of the world. This article does not predict that failure will occur it only seeks to explain the geopolitical implications if it does. The severity and trajectory of the crisis since 2008 suggest that failure is a high-impact event with a non-trivial probability. It may not occur, but it certainly merits serious analysis. Failure is widely seen as an imminent danger, but even if this moment passes, it will remain a significant risk for some time to come.

Would the failure of the euro really mean the beginning of the end of democracy in Europe? Could the global economy survive without a vibrant European economy? What would European architecture look like after the end of European integration? What are the implications for the United States, China, and the Middle East? Since the international order has been primarily a Western construction, with Europe as a key pillar, would the disintegration of the European Union or the eurozone have lasting and deleterious effects on world politics in the coming decade?

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