EUROPE:
Cause to Celebrate

By Melvyn B. Krauss

European malaise? Where? By Melvyn B. Krauss.

The European Union has been so successful that you would have thought there would be dancing in the streets on its 50th anniversary. Alas, there has been only persistent talk of failure—to achieve political union, to adopt a constitution, to exercise global leadership and vision, and to implement economic reforms. The list of laments goes on.

“The EU is on autopilot, in stalemate, in deep crisis,” claims Joschka Fischer, the former German foreign minister and an important voice in Europe.

But this angst and hand-wringing simply is not convincing. Consider Germany. After World War II, it was a beaten and devastated nation with a history of dysfunctional nationalism. Today, a totally rehabilitated Germany is as thoroughly European and democratic as any other EU nation—indeed, under the leadership of Angela Merkel, Germany has earned its place as Europe’s most important country.

The EU deserves great credit for this transformation. After the war, it was a prime EU objective to moderate nationalism and promote regionalism in Germany, a feat that was accomplished to the benefit of all Europeans. Shouldn’t they—and others—be celebrating this major success instead of becoming bogged down in defeatist talk of crisis and stalemate?

Besides, where are the alleged crisis and stalemate? On the economic front, the euro-zone economy performed extremely well in 2006, and most experts predict that economic growth in 2007 will be faster in Europe than in the United States, notwithstanding Germany’s hefty increase in value-added tax.

Even more impressive, the lack of a full political union in Europe has not stalemated the EU’s adoption of the euro and a common monetary policy. On the contrary, the quick international acceptance of the euro as one of the world’s premier currencies, aided by the European Central Bank’s determination to keep inflation under control, indicates that the monetary project is going full steam ahead.

Currently, the euro is strengthening against the dollar because central banks in Asia and the Middle East are increasing the euro component of their foreign exchange reserves—a clear vote of confidence in the new currency and the ECB. Both the success of the euro and the smooth functioning of the common monetary policy show that important “European” projects can be accomplished even without the benefit of a full political union.

While the EU’s member states have proved capable of putting aside their differences when forging a common monetary policy, a common foreign policy has proved more elusive. On issues like the Iraq war and U.S. plans to install missile defenses in Poland and the Czech Republic, Europeans appear to find it difficult to speak with a single voice.

The reason is clear: Europe remains too dependent on the United States for its defense needs. Some EU members (Germany and Italy) are more dependent on the United States than others (France) and thus more likely to support U.S. strategic initiatives. As long as these differences remain, so will Europe’s political divisions. But defense independence implies a vast reallocation of resources from social welfare programs to the military, which so far has not interested the Europeans.

Rather than reflecting a lack of political will to come together and speak with a single voice on strategic issues—the conventional interpretation—Europe’s diverse voices are the result of an implicit choice that Europeans make. Many have decided that it is better to keep their robust social-welfare programs and forgo a common foreign and defense policy, which would require massive changes in the European way of life.

Moreover, with the disappearance of the Soviet Union as a common threat, Europe’s left-wing parties are increasingly defining themselves as anti-American. Thus, when José Zapatero and the Socialists took control of Spain’s government from the conservatives, the country’s foreign policy switched from supporting the Americans in Iraq to opposing them. (But, interestingly, the switch from Silvio Berlusconi to Romano Prodi in Italy is having a less dramatic effect on Italy’s foreign policy because of the country’s greater defense dependence on the United States.)

Naturally, with socialists and social democrats in power in some EU countries, and conservatives in power in others, it is difficult for Europeans to find a single voice. This may change if a new common threat to Europe emerges, or if conservative parties follow the Left and become anti-American. Given President Bush’s extreme unpopularity in Europe, the emergence of an anti-American Right should no longer be considered a remote possibility.

But with Europe enjoying an unprecedented level of economic prosperity as a result of the EU’s dramatic accomplishments during its first 50 years, further political unification clearly can wait. Congratulations, not hand-wringing, should be the order of the day.

This essay was distributed by Project Syndicate in April 2007.

Available from the Hoover Press is In Search of Poland: The Superpowers’ Response to Solidarity, 1980–1989, by Arthur Rachwald. To order, call 800.935.2882 or visit www.hooverpress.org.

Melvyn Krauss is the William L. Clayton Senior Fellow at the Hoover Institution. He is also emeritus professor of economics at New York University. He is an expert on international economics and economic development.