A how many speeds Europe?

As the EU flounders in the face of reality, another non-solution to the eurozone's woes is being proposed: more control, less democracy and a long slump.

And so the prospect of a two-tier Europe is upon us — at least that's what's being whispered in Brussels, Paris and Berlin.

In truth there is already a two-tier Europe. A three-tier one, in fact. The inner core is the eurozone. Around this are the non-eurozone states, though these fall into the distinct two categories: refuseniks such as Britain and not-yet-niks like Poland. The third, outer tier consists of Romania and Bulgaria, whose citizens are not allowed to freely migrate to every other EU state.

If you wanted to, you might even call the Germanic economic core of Europe a tier, so how many is that, then? Four tiers? What about France, which is neither in relatively good shape like Germany, not is it on the brink of bankruptcy as Greece is. Five? What about Denmark? Is it in or out of the Schengen free-travel arrangement? Six?

The truth is that the European Union is about as united as a conference of anarchists.

Anyone who has been paying attention to European affairs in the last decade will have heard it all before. Having rejected the Lisbon treaty in 2008, the Irish electorate were threatened, by their own political leaders — and by French president Nicolas Sarkozy — with expulsion to the outer fringes of a "two-tier Europe", the actual phrase used at the time. Whether the prospect of banishment to Euro-Siberia was the reason Irish voters changed their minds a year later, we will never know. Equally likely is that they, as promised, voted "yes for jobs". (For the record, Irish unemployment now stands at 14.4 per cent, the highest it has been since 1994.)

From a purely technocratic point of view EU leaders could be forgiven for wanting to confine the damaged economies of Ireland, Portugal, Spain, Italy, Greece and even Belgium to the sin-bin. Hell, they'd probably want to sling Britain in too, just for being such a damn nuisance. Clearly British Labour party MP Chris Bryant is worried about just this. Writing in the Independent of London, Mr Bryant fears his country will become one of "the banlieues of Europe."

He needn't worry. Purgatory isn't what's on offer this time. Instead the proposal is for tighter integration of the eurozone economies, with non-participants forming the outer core, which sounds a lot like what we've already got. Well, yes and no. The plan is, in the words of Mr Sarkozy, for Europe to have two gears, both forward.

"In the end, clearly, there will be two European gears," he said: "one gear toward more integration in the eurozone and a gear that is more confederal in the European Union."

A currency union of countries that share neither a division of labour nor a fiscal policy was never going to hold together well in times of crisis, but all that is on the table now is the creation of a unified fiscal policy. This is what is really meant by tighter integration: budgets being decided not by elected national governments, but by a supra-national eurozone body. Whether or not it is called a finance ministry, that is precisely what it would, in essence, be.

One of the great lies of the eurocrisis is that it simply is the fault of "peripheral" economies such as Greece, Italy and Spain, where feckless "southerners" borrowed recklessly while stout German burghers worked hard and saved. Germans did save, but this child-like morality tale is not even half of the picture. In fact, the eurocrisis is a result of lopsided Keynesian pump-priming. Although many European economies could do with a significant amount of systematic capital investment in industry right now — call it stimulus if you must, though that term has become too elastic to be of much use in recent years — the boom in the eurozone was one giant stimulus package, except it favoured Germany. Here's how it worked: domestic demand and spending was kept low with tight controls on wages and the euro put an end to inconvenient exchange rates. At the same time, German banks lent heavily to other eurozone members. These member states then used the borrowed money to purchase goods and services exported by Germany, whose economy was, due to low domestic demand, geared-up entirely for export. The result? Germany enjoyed a lengthy industrial boom.

In order to get out of the mess we are now in, what is being proposed is an effective continuation of the absence of industrial policy in much of Europe. Germany will keep exporting, though growth will be significantly slower as much of rest of Europe won't be buying, while the eurozone's troubled economies will see not a stimulus package, but a tranquiliser package that will further slow their economies. This shot in the arm — shot of economic benzodiazepine, that is — will be administered by continuing to take money out of people's pockets, and therefore the national economies, by hiking taxes and cutting public services.

For a real eurozone finance ministry, though, there will have to be a new EU treaty, and that is not going to happen. Regardless of anyone's view on it, the chances of getting the Irish public to sign-up to a new EU treaty — any EU treaty — are, frankly, nil. Given that Ireland's constitution mandates a referendum on any changes to it, it is clear what this means for the plans of Ms Merkel and Mr Sarkozy: the European jalopy may have two gears, neither of them reverse, but in the shape of Ireland it does at least have a brake pedal.

As a result, any changes will have to come by the back-door and will be slow and piecemeal in nature, which amounts to a continuation of how the EU has already responded to the crisis. Talk of a break-up of the euro, or even of the EU itself, is over-blown. In reality, Europe is looking at a decade of compromise, slow decline in its prestige and economic slump.

Image by OpenDemocracy. CC licenced.