In Germany, things are complicated. It’s not clear what the new government will look like or even what its priorities will be. Most people think that a “black-red” coalition between the Christian Democrats and Christian Social Union on the one hand and the Social Democrats on the other would take a slightly less hawkish stand on European financial matters—but still won’t want to spend more German taxpayer’s money on “unworthy” Greeks and “ungrateful” Italians than is absolutely necessary. Discussions of a European banking union, under which governments across the eurozone would be jointly responsible for the bank problems in all member countries, look like a major point of contention. The Germans do not want a banking union that could end up with Germans forced to dip into the kitty to support failed or mismanaged banks across the eurozone; nor does the German political class welcome the kind of pan-European bank regulation that would scrutinize Germany’s somewhat dodgy but politically well connected state banks connected to the governments of federal Germany’s powerful states.
There are Germans who sympathize with the Italian critique of EU austerity policy, but Germans on the whole seem to feel that in pushing a tough reform agenda in Europe, and linking further payments and bailouts to that reform agenda, they are doing their neighbors a favor. They sincerely believe that their own relatively strong economic performance is the result of their willingness to accept some liberalizing reforms coupled with a commitment to fiscal prudence. They think that by exporting this model they are helping other European countries on the path to lasting prosperity, and they believe that with some patience, the other European countries will soon begin to experience the benefits of German-style economic reform.
Despite French fears of isolation, there are some very smart Germans who think a lot about the Middle East. (Support Morocco is the advice I heard from some of them, and despite French fears, there is at least some German awareness that Algeria could be the next bomb to go off, and that this would be a very bad thing if it were to happen.) But the Germans don’t look at the Middle East through quite the same lenses that the British and the French use; in particular Germany does not seem as concerned about or responsive to the opinions of the Gulf monarchies. Those countries channel a lot of money through the City of London and are good customers for many things that important French companies build. While Germany has commercial ties with the Gulf, its historic links with the Middle East are more toward Turkey and Iran. The Mediterranean feels farther away from Berlin than it does from Paris—and Moscow and Warsaw feel much closer. Berlin is pulling out all the stops to align Ukraine with the EU and against Russia’s effort to rebuild a rival Eurasian bloc; Paris seems pretty “meh” about Ukraine, but really wanted European support for military action in Syria.
Energy pulls France south and Germany east; that is one of the basic realities in the EU today that undermines the EU’s ability to develop and project a coherent and forceful foreign policy. Germany wants Russian gas and oil, and it also wants to check Russia’s ability to use its energy resources as a geopolitical tool. Berlin is only an hour’s drive from Poland, and Germany is deeply engaged with the Scandinavians, the Baltic republics and other easterners for whom relations with Russia are both difficult and important. Germany doesn’t want a quarrel with Russia, but Moscow’s habit of playing games with energy supplies and its evident tendencies to bully smaller neighbors have forced the Germans into a more vigilant stance than they prefer.
For France, the eastern fringes of the EU are a long way off and frankly not very interesting. Latvia and Moldova don’t figure largely into the fashion industry’s expansion plans, and North Africa is better positioned than Siberia to meet France’s energy needs.
On UK membership, the Germans are as irritated as the French by cries of British exceptionalism and the constant demands for special treatment and exemptions. Germans also (and especially members of the SPD) blame reckless lending by the loosely regulated London financial sector for the financial crisis. But from a German point of view, the French can also be vain and irritating partners. The German method seems to be to accept the shortcomings of its partners—things that cannot be changed—and nevertheless work patiently and systematically to find a way forward. Germany still wants a united Europe and it still wants compromises that will keep the French and the British in the same boat. It does not want the kind of EU the French would like to see, and as a strong exporting economy it is more interested in a transatlantic trade deal than France. From Berlin, it appears that keeping Britain in the EU will offer a balance to French protectionism and state-centric ideas.
What all this seems to be suggesting is that at least right now the two things that ought to be pulling Europeans together if they were really headed toward building a much stronger union—money and foreign policy—are instead pulling them apart. The creation of the euro is responsible for more hatred and suspicion among Europeans than any other event since World War Two, and the bloc seems unable to agree on an international strategy.
Over the decades, many English-speaking analysts have looked at phenomena like these and predicted that the European experiment would ultimately fall apart. That seems unlikely to me. In spite of their differences and their quarrels most Europeans—and especially most of the elites in those countries—are much too committed to the “European Project” to let it break up. Many economists looked at the deep design flaws of the euro, for example, and predicted that this unwieldy currency would never get off the ground. Those skeptics were right that the euro wouldn’t work well, but they underestimated the depth of the commitment to putting the euro in place, disaster or not.
These days, the euro is held up partly by sheer political will, but partly also by the sober realization that the pain of dismantling the currency would be intense under the best of circumstances and that the political and economic issues involved would make it impossible to get out of the euro adroitly. Europe is a very wealthy continent and if it wants a common currency it has the wherewithal to pay for one for a long time to come.
I can imagine a future in which the EU resumes a steady progress toward an “ever closer union,” but it seems more likely at this point that we can expect it to look more and more like the Holy Roman Empire in its prime: a complicated assemblage of many different kinds of states, with a weak executive and legislature, a somewhat stronger judiciary, and a great many offices and authorities that work in their own way and time.
If things work out along these lines, I would expect the euro to muddle along, but perhaps with many forms of parallel money operating in the nooks and crannies of the system. Ingenious workarounds would mitigate the strict official rules as smart lawyers and accountants worked through the treaties in search of loopholes. The currency union would be like an unhappy Italian marriage in the old days: no divorce or official breakup, but mistresses on the side. This would be an expensive and messy system, and it might well permanently slow Europe’s growth, but a flawed currency union could limp along for a long time.
EU foreign policy would also be more of the same. Germany would work on German issues from a German perspective, and France would continue to focus on the Mediterranean. On issues where there was a European consensus, the EU foreign office would play a more significant role, but Brussels would have no power to impose a foreign policy on the stronger member states.
Developing in this way would not make Europe a completely ineffective power. Americans should not forget that the divided and squabbling EU is on the cusp of decisively frustrating Putin’s geopolitical ambitions. Between detaching Ukraine from Russia’s new customs union and hacking at Gazprom’s position through the application of European antitrust law, the EU is in the process of wrecking Russia’s hopes to rebuild its standing as a world power. Europe’s importance as a market gives it real leverage in world affairs, even if its institutional design and its internal divisions sometimes weaken its hand.
If the future of European foreign policy is more of the same, America is likely to find Europe a sometimes frustrating but basically positive force. (Europeans are likely to view the United States in much the same way.) This would not be a Europe that would grow as a military power, or be a forceful ally on a range of global issues. Nevertheless, US and EU interests would often be reasonably closely aligned and Europe will still matter even if EU institutions aren’t particularly strong. Resisting Russian expansionism and seeking stability in the Mediterranean are US goals as well. Europe might be, from an American point of view, flabby and indecisive, but its heart would mostly be in the right place. And while Europe might not be a dynamo of economic innovation and growth, it would remain a very rich and attractive market and a source of investment capital.
All this is modestly encouraging, and I returned from Europe feeling that if the US and Europe remain doomed to disappoint one another’s greatest hopes, the basic Atlantic partnership looks durable and sound. But there’s a caveat. The bitter public feelings generated by the euro crisis and its long, painful aftermath are still working their slow and ugly way through the European political system. In country after country we are seeing steady gains by political movements that bear a superficial resemblance to the American Tea Party, but in fact flirt much more with the kind of dangerous nationalist and chauvinist ideas that have proven so destructive in Europe’s past.
The Germans are betting the ranch on the hope that the Italians and others can and will reform enough to make the euro viable before patience in the north and south runs out. They are willing to put more money into the system than they have yet done — but aren’t willing to cut Club Med much slack on reforms that they deem truly essential.
Meanwhile, the good ship Euro sails tragically on. We aren’t looking at anything as spectacular as a shipwreck: Europe is becalmed in the horse latitudes rather than striking an iceberg. It is seething rather than sinking, but while that means there is no immediate danger of a financial crash (barring external shocks), it also means that there aren’t many chances for a quick improvement in its economic condition.
This isn’t good news. The longer the euro crisis blights the lives of the rising generation of Europeans, the more we must worry about the political health of countries like Hungary, Greece, the Balkan states and even France. And as the political culture inside different European countries continues to erode, the difficulties in the path of European integration will be harder to overcome.
