Paying dearly for European insanity

Published in Business Spectator (Melbourne), 21 July 2011

Europe’s political elites are gathered in Brussels today for yet another emergency summit on the euro currency. For this column it would be tempting to seize the moment and rehash all the arguments for why the euro will never work and cannot be saved.

But after almost two years of the euro crisis, even I am getting tired of this exercise. And in a way, at least outside EU circles, everybody knows why the common currency is doomed. So instead let me reflect on the underlying psychological flaws of European policymaking.

Einstein once defined insanity as, “doing the same thing over and over again and expecting different results.” He must have had the European Union in mind.

Bailing out one country after the other, Europe’s leaders never tire to claim that this last bailout, this last emergency summit, this last rescue mechanism will finally solve the crisis once and for all. And then, two weeks later, they are meeting again to proclaim exactly the same after another emergency round. The motto of Europe’s crisis management is always ‘this time is different’.

Clearly, in the Einsteinian sense, European politicians are insane. They are unwilling to learn the lessons of their dilettantism because that would require admitting previous failures.

There is a general European unwillingness to accept criticism. Nothing that deviates from the EU’s own narrative about the inevitability of ever closer union is allowed to spoil the party. How else could one understand German treasurer Wolfgang Schäuble? Last week he seriously claimed that the euro was a ‘success story’ and that it had especially benefitted countries like Greece. In psychology, they have a term for such pathological behaviour. It’s called denial.

I have my very own experiences with European denialism and the EU’s unwillingness to take criticism. As a high school student in Germany, more than twenty years ago, I took part in the ‘Europe at School’ essay competition. Every year since 1953 students have been encouraged to write essays on questions of European integration.

When I submitted a critical piece on European politics one year, I won a small consolation prize. The next year, the topic allowed for a slightly more optimistic assessment and so I gained an invitation from the speaker of parliament to Bonn. However, when another year later I wholeheartedly praised the beneficial effects of the Single Market I was awarded with the Honorary Prize of the Federal Chancellor. I still have the big book prize with the handwritten personal dedication from Helmut Kohl on my shelves at home.

It was very obvious how the competition worked. The more you applauded the EU, the more the judges liked your essays. It all had a whiff of Soviet-style indoctrination. If only I had learnt my lessons at school I would still be writing panegyrics on the EU today. But that would have meant turning a blind eye to the serious flaws of the EU project.

Not much has changed since my high school days, as I discovered last week. I had been invited to deliver a public lecture to the Centre for European Studies at the Australian National University, an institution part-funded by the EU.

The title of my speech, ‘Europe’s painful farewell’, had obviously made the delegation of the EU Commission in Canberra nervous. Perhaps they also keep a file with all my incriminating Business Spectator columns on Europe. In any case, two weeks before the event I was informed that they would send their First Counsellor to formally respond to my speech. It was undoubtedly an exercise in limiting the damage from my EU-sceptical views.

As I heard from a reliable source, the EU delegation was deeply concerned about the things I had to say. And so in order to neutralise my outrageous opinions European embassies were asked to ensure their diplomats attended the event as well. They did.

Apart from a handful of Australians, last Wednesday’s audience at ANU was a small assembly of European diplomats. They came from countries like France, Germany, Belgium, Denmark, Finland and Malta. Even Croatia, not yet part of the European Union, had sent a representative. The things you need to do to become an EU member.

After I had finished my speech on the sad state of Europe, it happened as I had expected. One EU diplomat after the other rose to sing the praises of the EU and defend it against all criticisms, even those I had not made. They were so passionate in their speeches that I wondered whether the EU delegation had offered a prize for the best defence of the EU. Perhaps they could win a romantic dinner with either EU foreign secretary Catherine Ashton or EU president Herman van Rompuy?

In any case, it was telling that none of the diplomats even bothered to respond to my economic concerns about Europe’s debt and monetary crisis. Instead, one after the other began their statements with variations of ‘I’m not an economist but …’

And so I was informed that soon Europe would lead the world in green technologies, the euro was an important symbol of integration, and small hiccups like the debt crisis would not deter the EU from pursuing its integration agenda further. Their refusal to engage with my criticism on an economic basis was so bizarre that I’d rather not try to imagine how it must have sounded to the few Australians in the room.

A day later I received an email from one of the European embassies in Canberra. Writing in an apologetic tone, a senior diplomat who had attended the event told me that he was grateful for my views. Later I also spoke with another friendly European diplomat. He asked me not to take his colleagues’ public utterances too seriously. “They’re only doing their jobs; of course we all know what a terrible state Europe is in.”

Everything that’s wrong with Europe, it was on display in Canberra last week. Economic questions are treated as political ones; high hopes have to pass as strategies; utopias are considered realities. And if you harbour any doubts about whether all of this makes sense you better keep them to yourself. For otherwise you leave the sphere of what is officially sanctioned as respectable and politically correct politics.

If this were only a problem for Europe, the EU’s denialism would be bad enough. But it isn’t. The refusal of EU elites to come to grips with their failures is the biggest threat to the global economy. The world will pay dearly for Europe’s stubborn utopianism.

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