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Europe’s never-ending integration madness

Published in Business Spectator (Melbourne), 28 May 2015

europe flagsIf the definition of madness is ‘doing something over and over again while expecting a different result’, then Europe is certainly going mad.

At the same time that European integration is heading for the rocks, the leaders of France and Germany are calling for more of the same.

There is a certain irony about it. Greece is edging closer to bankruptcy and a Grexit; Britain is preparing for its referendum on a Brexit. And yet, as if none of this mattered, German Chancellor Angela Merkel and France’s President François Hollande are preparing the next steps of European integration.

As French daily Le Monde revealed on Monday, Merkel and Hollande will propose an even deeper union between eurozone members at the EU’s next summit in July. A document prepared by their two governments suggests more coordination of economic, social and fiscal policies across eurozone member states. It even hints at a common public investment policy — something France has long called for (and Germany has always stubbornly rejected).

Strengthening European integration at the time of its greatest crisis may appear odd to outside observers. After all, it is hard to imagine there being any great popular sentiment in either France or Germany for pushing European integration to the next level.

European integration has always been designed by those in power and not by those governed. Put differently, the entire framework of European integration has always been one designed by Europe’s elites.

The people of Europe did not one day realise that they wanted to be integrated and bound together by a supra-national organisation like the EU. The French, Italians or Dutch did not suddenly demand to be European henceforth. The Germans did not plead with their government to give up the deutschemark and introduce the euro. There has never been a large, popular movement for any kind of European integration.

That European integration happened regardless is entirely due to the agenda of its political and economic elites. It was them who tried to convince their peoples of the benefits of Europe. And, if that was not enough, they were prepared to go ahead regardless.

Of course, politicians are only too aware of those areas of European integration that would never stand a chance of being implemented if the people were asked. In this sense, Merkel and Hollande are following in the giant footsteps of Helmut Kohl, the former German chancellor. Kohl was of course one of the architects of European monetary union.

After leaving office, Kohl has been very explicit in a number of interviews. He did not put the introduction of the euro currency to a popular vote because there was no doubt it would have failed.

In 2013, Kohl told a journalist: “I knew that I could never win a referendum in Germany. We would have lost a referendum on the introduction of the euro. That’s quite clear. I would have lost and by seven to three. If a Chancellor is trying to push something through, he must be a man of power. And if he’s smart, he knows when the time is ripe. In one case — the euro — I was like a dictator.”

Merkel and Hollande are now planning the exact same thing. What makes their plans appear more cynical, however, is their timing. It is no coincidence that they will be tabled the same moment that British Prime Minister David Cameron will present his demands for a renegotiation of the EU’s treaties.

The French-German initiative for closer integration is thus also an initiative to block any substantial reforms of the EU.

It is somewhat astonishing that Merkel sides so openly with Hollande against Cameron. It took Merkel and Hollande almost two years to grow close. Their relationship used to be frosty, not least because Merkel openly supported Hollande’s predecessor Nicolas Sarkozy in the French presidential election. The two leaders only developed a closer working relationship in the Ukraine crisis. Meanwhile, despite all their disagreements on Europe, Merkel always needed Cameron as a counterweight to continental anti-austerity movements.

It seems Merkel has given up on Cameron as a potential ally after the British Prime Minister made his demands for renegotiations of the EU clear. She probably fears that Cameron’s isolation within the EU will weaken him as a potential partner. Instead, Merkel is aligning Germany with France’s economic agenda.

The problem with Merkel’s new integrationist strategy is that it comes just at a time when the wheels are coming off Europe’s monetary union. Greece’s situation is deteriorating, and not even professional optimists such as the head of the European Stability Mechanism, Klaus Regling, rule out a Greek default. Greece may thus be forced out of the eurozone (or install a parallel currency) at the very moment that Merkel and Hollande propose a deepening of eurozone coordination.

Merkel’s push for greater eurozone integration may be good politics by gaining her a new ally. But it is bad economics since it the eurozone does not need greater coordination but preparation for the exit of one of its members.

In any case, movements towards common economic and fiscal policies for the whole eurozone are pretty much the last thing that ordinary Europeans would currently demand for. After five years of euro crisis, it is no exaggeration to say that the euro project is not particularly popular.

To seriously propose the next steps on the path of European integration only shows how far removed Europe’s elites are from their electorates. It also shows that they still have not understood that past integration steps are the root of the current crisis.

It may be madness to do something over and over again while expecting a different result. But conversely, it is only reasonable to expect Europe’s next integration steps to be just as successful as the previous ones.

In other words, brace for the next crisis once eurozone members have harmonised their tax, spending and social policies.

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