Not dead yet

On 13 May, at the very peak of the Greek financial crisis, German chancellor Angela Merkel shed some surprising light on her vision for Europe. Merkel was presenting theCharlemagne Prize to Polish prime minister Donald Tusk in the city of Aachen, Germany. “The euro crisis,” Merkel stressed, “is no ordinary crisis. It is the most important test for Europe since the signing of the Treaty of Rome in 1957. An existential test. If we fail, there is no telling what the consequences will be. If we succeed, Europe will emerge stronger than ever.”

These wholly unexpected remarks caught the international press off guard. “To overcome the crisis,” the chancellor went on, “we need to face up more squarely to the actual challenges, draw the necessary legal conclusions and dovetail our economic and financial policies more closely than ever. We should also take initiatives that go beyond the economic sphere, for example by giving some thought to the creation a European army. Finally, we have to defend our principles and our values: democracy, the protection of human rights and sustainable growth.”

Centre of gravity has shifted from Brussels to Berlin

In light of Merkel’s remarks,US political scientist Charles Kupchan’s recent pronouncement of the death of European integration shows how hard it is, not only in the US, to scratch below the convoluted surface of Europe. Prophesying the impending doom of the European project may seem like a provocation, especially coming from a US in the throes of an economic crisis so severe as to disfigure its very identity and future. But Europe is, by its very nature, a more nebulous entity, a ship sailing, ever since it was first conceived, in search of a clear-cut destination.

In the wake of the crisis, the EU centre of gravity has de facto shifted from Brussels towards Berlin. To fully gauge Germany’s mounting influence, we need to go back to theEuropean Council communiqué of 11 February 2010. The Greek crisis was coming to a head and the economic heavyweights were receiving more and more urgent appeals to shore up the flailing country. The word “solidarity”, however, does not occur in the communiqué. Newly-appointed Council president Herman Van Rompuybacked Berlin’s stance, underscoring Greek responsibility for its plight while acknowledging the involvement of all the eurozone countries in view of their vested interest in the solidity of the euro. In a word, European rhetoric changed that day: European solidarity gave way to national interest.

Germany reaps quite measurable benefits from the euro

Between the European Council meetings in February andMarch, it was Merkel who took the initiative, sidelining Commission president Barroso and even Van Rompuy.Council decisions were subsequently thrashed out by and between Paris and Berlin, with ECB president Jean-Claude Trichet figuring as the key middleman. In the faceoff that followed, the two capitals gradually came round to the need for closer cooperation and economic governance of the euro. In April, however, the slow pace of European decisionmaking, repeatedly bemoaned by Trichet, left the field open for the financial markets to launch an attack, convinced that Berlin’s political commitment to Europe was flagging and European solidarity on the verge of dissolving for good. That was a mistaken assessment.The decisions reached in early May eventually gave rise to an aid scheme [the financial stabilisation mechanism] that was to slake the Greek crisis. The euro will prove “the cornerstone of the European construct”, declared Merkel in Berlin. “Were it to be abandoned, the damage would be immeasurable.”

Indeed, Germany reaps quite measurable benefits from the euro. All the European countries, for which Germany’s success is either the carrot or the stick, are now taking the German approach to economic governance: more fiscal discipline, structural reforms to close gaps in competitiveness, creating crisis management mechanisms and reinforcing economic coordination. These objectives are all agenda items for thetask force spearheaded by Van Rompuy, who will present the results of their efforts in the months to come.

Member states are now redefining their common interests

In July, the European Council reachedagreement on aEuropean “External Action Service” and turned certain crisis management cells into permanent fixtures. In addition,a new single market strategy was mapped out by [EU competition commissioner] Mario Monti, and a common EU budget is currently on the drawing board.

So the crisis and its consequences showed European countries a new aspect of globalisation. Now that they have grasped the virtues and the obligations entailed by the euro, the member states are redefining their common interests. We will probably need some new European treaties, as Merkel suggested, and new political perspectives. The crisis has not spelled the end of Europe, as Charles Kupchan would have it: in fact, it has probably reset the counter.

Reactions

Four recipes for weathering hard times

Charles Kupchan’s recent prophecies of EU doom in the Washington Post had the boomerang effect of setting off a wave of pride and optimism among European analysts. Four of them,interviewed by Il Sole 24 Ore, admit that Europe is in dire straits, but insist there’s no need to jump ship. According to Marta Dassù of theAspen Institute, the problems with European governance are due to the fact that the EU “is no longer a dream, but a reality”, and the key to the current crisis lies in addressing the imbalances caused by Germany’s swelling preponderance. EconomistFranco Bruni opines that "the road to recovery starts with financial reforms: the budgetary policies the EU is working on should spur greater cohesion".Daniel Gros, director of the Centre for European Policy Studies, argues that, while a joint financial approach is a must, "the recovery has to come from the member states” – and it “won’t happen till electorates realise the time for change has come”.Stefano Micossi, professor at the College of Europe in Bruges, Belgium, opines that "Europe’s present-day weakness is represented by the Barroso-Van Rompuy duo": the EU “lacks international leaders – and a compass". That being said, "The reaction to the risk of its members’ defaulting proved that, though there is no skipper on board, the ship is changing tack.”