SPEAKING
FREELY Europe's lost model
identity By Emanuele Scimia
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please
click hereif you are interested in
contributing.
The anti-austerity
wave that has crashed onto Europe after the last
round of national and local elections has brought
back to the fore the age-old face-off between the
Keynesian socio-economic engineering and its
Hayekian nemesis. However, while the two
opposing camps are bickering
over the best recipe to save the Old Continent
from the crisis, the European Union is
progressively giving up geopolitical qualities
that were worth emulating.
While the
ghosts of new, dramatic elections are haunting
Greece, European electors keep on slapping
incumbent governments and traditional political
forces backing the austerity policies conceived by
the European Union (EU) and the International
Monetary Fund (IMF) to tackle the sovereign debt
crisis.
Yet, the winning front in this
electoral spring across Europe appears to be
extremely incoherent, since it is made up of both
pro-EU and Euro-skeptic political forces which
have in common only the aversion to the line of
financial rigor embodied by the German Chancellor
Angela Merkel and the former French President
Nicholas Sarkozy. In France, the country's new
president Francois Hollande (Socialist Party),
will have to take into account the strong showing
of Marine Le Pen (leader of the far-right National
Front) in the first round of the presidential
vote. Greek parliamentary elections saw the surge
of parties rejecting the conditions of the second
international bailout - devised to ward off the
threat of a country's default - and the success of
the neo-Nazi Golden Dawn (which asks for the
border with Turkey to be mined against the flow of
illegal immigrants into the country, just to make
things clear).
Then, there have been the
exploits of the anti-establishment forces: the
Pirates Party in Germany's state ballots and the
Five Stars Movement in Italy's local voting. Let
alone the Conservative Party's debacle in the
British local elections in favor of the Labour
Party.
The strong point of both Hollande
and Hannelore Kraft - the SPD leader in North
Rhine-Westphalia - is the emphasis on the economic
growth and the public spending. Hollande aims at
renegotiating some terms of the EU's Fiscal
Compact, the pact imposing stricter controls on
the budget of 25 European countries (United
Kingdom and the Czech Republic refused to sign it)
. However, the rise of a new paradigm that
overcomes the policy of budget austerity is
hampered by the shortage of adequate resources.
Implementing expansionary actions in
Europe is a hard task, since most of EU countries
already find themselves in an uncomfortable
position, faced with mammoth and expensive
administrative bodies - both at national and local
level - which account for a huge share of their
public spending. And even "rigorous" Germany is
not exempt from these troubles, as it faces a
domestic dilemma: whether or not to bailout its
debt-ridden local communities.
In this
regard, disciples of John Maynard Keynes and
Friedrich von Hayek are lining up again on the
European field, with pro-growth Keynesians
advocating more public intervention into economy
and Hayekian supporter of rigor calling for much
slimmer governments.
In the aftermath of
the presidential election in France, the European
Commission President Jose Manuel Durao Barroso
declared that the logic of stimulating growth
through deficit-spending was completely
irresponsible.
In the opinion of Barroso,
the way forward for the EU was to launch "projects
bonds" (eurobonds), by seeking long-term private
investments to fund the European infrastructural
programs, and increase the lending capacity of the
European Investment Bank.
Such a position
is backed by Hollande but is dismissed by Merkel,
who see as unsustainable plans to boost economy by
the emission of eurobonds and the like. The
simmering French-German rift on this issue is
going to be at the center of an informal European
Council on May 23.
In the meantime, in the
desperate search for matching rigor and growth,
von Hayek and Keynes, pundits continue to
elaborate new solutions without realizing that
their financial alchemy is often overtaken by
events. For instance, talking to Reuters on May 8,
Liaquat Ahamed stated that "the only way to make
Europe competitive again is to let prices rise in
the north and wages fall in the south".
The perspective of a two-speed Europe as
envisaged by the Pulitzer Prize-winner is indeed
out-of-date. The EU's Mediterranean countries are
already grappling with plummeting wages. In Italy,
where the crisis has provoked a spate of suicides
among unemployed workers as much as indebted small
entrepreneurs, the gap between salaries and prices
is widening to levels last experienced back in
1995 (well before the euro's introduction). And in
Spain the situation is quite the same, if not
worse than in Italy.
The middle-classes of
southern Europe are dramatically impoverishing.
This dynamic is poised to tear down the social
cohesion within the affected countries as well as
within the EU as a whole. Paradoxically, in some
respects the EU of today is looking ever more like
the emerging countries towards which it should
appear as a model of political and economic
integration.
Under the terms of the Plan
of Action to strengthen from 2013 to 2017 the
enhanced partnership between the EU and the
Association of Southeast Asian Nations (ASEAN),
Brussels will support the ASEAN's economic
integration and assist its efforts to achieve the
free flow of goods among the 10 state members.
However, it is difficult to think of a
European Union that continues to be a model for
ASEAN countries while it is itself intent on
replicating the labor structure of these nations,
characterized by low wages, tough conditions of
work and the lack of social security's systems
(since the end of World War II, social security
has traditionally featured Europe's market
economy).
United States relies on the
military power to build credible diplomatic and
trade policies, and that is in Asia as in the rest
of the world. On the other hand, there has been
just one geopolitical "weapon" that Europe could
have wielded since the end of the Cold War: its
ability to induce a spirit of emulation among
those developing countries sensitive to
supranational integration's prospects. A popgun
according to many. In reality the quality that has
defined the Old Europe's strategic identity until
now.
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say.Please
click hereif you are interested in
contributing. Articles submitted for this section
allow our readers to express their opinions and do
not necessarily meet the same editorial standards
of Asia Times Online's regular contributors.
Emanuele Scimia is a
journalist and geopolitical analyst based in Rome.
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