What next for Europe ?
Friday 02 December 2011By Peter Beckett
The Euro, and the process of European integration, wasn’t designed for this.
When it comes to long and painstaking trade negotiations, or legislating on the ins and outs of how this or that chemical should be classified, the EU seems to do rather a good job. But put in front of it impending financial doom and destruction, and the cracks begin to show.
A currency without common bonds and a system of fiscal transfers was always doomed to failure: imagine what would happen in the US if California issued its own bonds and objected to paying for services in Michigan. I
t’s a wonder so few people saw this coming, and I count myself as one of the many who has been proven wrong by recent events. But we are where we are, and judging by the actions of European leaders we might well end up staying there.
The painful process of negotiations followed by ratification through national parliaments means that any solution is out of date before it can be implemented, the result of which is the impression that Europe can tends to solve the last crisis during the current one.
The recent deal, which consisted of a mixture of Greek defaults in all but name, bank recapitalisation and bolstering the European Financial Stability Fund (EFSF) might just have worked if Europe’s leaders had agreed on it 18 months ago. Today it looks about as effective as a handbrake on a canoe, but a system based on a complicated mathematical formula for consensus isn’t particularly well placed to make tough decisions quickly.
With an election looming, German Chancellor Angela Merkel is hardly likely to state the obvious: being tied into weaker economies has allowed German exports to boom, thanks in part to a weaker currency held down by those very same profligate Southern European countries now being condemned for their profligacy.
Had they kept the Deutsche Mark, German business would be in the same perilous situation as that of their Swiss neighbours. But inside the same currency zone, the ........................
To read Peter Beckett's article in full in EU Reporter's digital magazine please visit
http://www.eureporter.co/magazine/201112/