A dangerous euro enchantment

Published in Business Spectator (Melbourne), 28 April 2011

The creation of the euro currency was meant to be the culmination of Europe’s ever closer union. By using the same coins and banknotes, former enemies would become business partners and eventually friends, the common currency’s supporters proclaimed. In this way, the continent’s old rivalries would disappear and give way to a new pan-European identity.

As naïve as this European pipedream looks in hindsight, just as dangerous are the implications of its failure. Instead of bringing Europe’s peoples closer together, the struggling euro currency is driving them further apart. What was meant to complete the European project could well bring about its downfall.

At no time in its history has the European Union been as unpopular with the electorate as it is today. In Finland, the anti-EU party ‘True Finns’ just won a spectacular one fifth of the vote in recent parliamentary elections. In France, the right-extreme National Front looks stronger than ever ahead of next year’s presidential elections; and if Austrians went to the polls today chances are the EU-critical Freedom Party would become the strongest parliamentary faction.

What started as an ambitious project with great hopes has turned into a nightmare. If you are familiar with classical German poetry, you may be reminded of Goethe’s ballad of The Sorcerer’s Apprentice. When the old wizard leaves the house, his apprentice tries to utilise some of his master’s spells to his advantage. Initially, the magic seems to work just fine. But then the apprentice learns to his horror that he does not know how to stop it when it turns into an evil force. In his greatest despair he cries out for his master to rid him of the spirits that he had called.

Europe’s political leaders should probably want to do likewise. But there is no master to turn to. The spirits they have called they now have to deal with all by themselves. Yet judging by their remarks, they have not yet understood that their grand European experiment is going horribly wrong.

The flipside of the new radical parties’ success is the failure of the political establishment. In the past, Europe’s politicians were prepared to ignore the will of the people if deemed necessary to further their pet EU projects. If people had had a say, it is doubtful that the euro currency would have ever been introduced and it is even less likely that the various euro bailout packages would have been accepted.

The current euro crisis shows that the established parties are maintaining their contempt for voters. No popular vote could make the euro elite doubt their course; no crisis of public confidence is allowed to deter them from their grand schemes.

To see how unwilling Europe’s political establishment is to assess its policies, one only has to look at the reactions to the electoral success of the True Finns. Because political decisions within the eurozone require unanimity, a Finnish coalition government that includes the True Finns could block all future rescue packages for the euro. But playing by the rules of European decision-making is of course no option when the euro is at stake.

A few days after the Finnish elections, Alexander Alvaro, deputy chairman of the EU parliament’s budget committee, claimed that the unanimity principle needed to be abolished so that no single country could block payments to struggling countries like Portugal. Alvaro, who holds both German and Portuguese citizenships, probably does not even realise that it is precisely such nonchalance about law and democracy that drives European voters to radical protest parties.

The grand European project does not allow for normal democratic debates, so it seems. This is astonishing because the sums required for its realisation – or at least to prevent its immediate failure – are gigantic.

Last year, the German parliament casually accepted loan guarantees for troubled euro periphery countries that are equivalent to two thirds of Germany’s annual tax revenue. In any other country, such measures would have been worth a national debate. In Germany, it was considered sufficient that Chancellor Merkel declared that a failure of the currency would equal a failure of Europe. End of debate, no further questions allowed. It’s democracy politburo style.

Under such circumstances, it is a small miracle that there has not yet formed a radical party to better protect the interests of German taxpayers. Admittedly, any party calling itself “True Germans” would be either ridiculed or labelled neo-Nazi – just as the “True Finns” have been widely (and falsely) portrayed as racists and extremists. But once again, such demonising exercises by the political establishment only show how wide the rift between an angry and anxious public and its political class has become.

Before the introduction of the euro, European peoples were indeed moving closer together. The common market had established freedom of movement for people, capital, goods and services. It had created the biggest single market on the planet, and the increased choice and competition had been a blessing for Europe.

The introduction of the euro was the moment when the good magic of European integration turned evil. Its forces could no longer be controlled by Europe’s political class; their old spells no longer worked against the spirits they had called.

Where Europe’s elites had hoped for harmony, they received confrontation. Where they had banked on economic benefits, they had to establish rescue mechanisms. Where they had finally wanted to bury old nationalisms, they had raised them from their graves. And in doing all of this, they lost touch with the people they were supposed to represent.

The evil spirits unleashed by the euro apprentices are not just a disaster for the continent’s economy. They have the potential to damage and weaken the political systems in many of its countries. There is no master wizard to stop this looming catastrophe; there is not even a master plan.

In comparison, even Goethe’s Sorcerer’s Apprentice reads like an optimistic fairy tale. At least it has a happy ending.

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