The champions of the European Union once touted it as a “bold new experiment in living” and “the best hope in an insecure age.” But these days “fear is coursing through the corridors of Brussels,” as the B.B.C. reported in September. Such fear is justified, for the nations of Europe are struggling with fiscal problems that challenge the integrity of the whole E.U.-topian ideal. Greece teetering on the brink of default on its debts, E.U. nations squabbling about how to deal with the crisis, debt levels approaching 100 percent of GDP even in economic-powerhouse countries like Germany and France, and European banks exposed to depreciating government bonds are some of the signposts on the road to decline.
A monetary union comprising independent states, each with its own peculiar economic and political interests, histories, cultural norms, laws, and fiscal systems, was bound to end up in the current crisis. All that borrowed money, however, was necessary for funding the lavish social welfare entitlements and employment benefits that once impressed champions of the “European Dream.” Yet, despite the greater fiscal integration created by the E.U., sluggish, over-regulated, over-taxed economies could not generate enough money to pay for such amenities. Now, the president of the European Council, Herman Van Rompuy, admits, “We can’t finance our social model.”