The End of the West: The Once and Future Europe

THE END OF THE WEST

Princeton University Press

Ruth O’Brien, Series Editor

THE END OF THE WEST

THE ONCE AND FUTURE EUROPE

With a new preface by the author

DAVID MARQUAND

Copyright © 2011 by David Marquand

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Cover photo: Constantine Manos, Man Reading Newspaper,

Chania, Crete, 1962, from A Greek Portfolio. © Costa Manos/Magnum.

All Rights Reserved

Third printing, and first paperback printing, with a new preface, 2012

Paperback ISBN 978-0-691-15608-8

The Library of Congress has cataloged the cloth edition of this book as follows

Marquand, David.

The end of the West : the once and future Europe / David Marquand.

p.     cm. — (The public square book series)

Includes bibliographical references and index.

ISBN 978-0-691-14159-6 (hardcover : acid-free paper) 1. European Union countries—Politics and government—21st century. 2. Europe—Politics and government—21st century. I. Title.

JN30.M3536 2011

320.94—dc22       2010046141

British Library Cataloging-in-Publication Data is available

This book has been composed in Minion Pro

Printed on acid-free paper. ∞

Printed in the United States of America

3  5  7  9  10  8  6  4

To the memory of

Nina Fishman and Ghita Ionescu,

dear friends and staunch Europeans

CONTENTS

Preface to the Paperback Edition

Foreword by Ruth O’Brien

Acknowledgments

– I –

Prologue

– II –

Weighing like a Nightmare

– III –

Hate—and Hope

– IV –

The Revenge of Politics

– V –

Which Boundaries? Whose History?

Notes

Index

PREFACE TO THE

PAPERBACK EDITION

WHEN THIS BOOK WENT TO PRESS in 2010 it was already clear that all was not well with the European Union. True, it had extraordinary achievements to its credit. The continent that had been a cockpit for innumerable bloody conflicts—between kings and emperors, Catholics and Protestants, revolution and reaction, totalitarianism and democracy—had enjoyed its longest period of peace and prosperity since the end of the Roman Empire. The age-old rivalry between France and Germany, the motor of two horrifyingly destructive world wars as well as a long series of intra-European ones, had been put to sleep. Right across the continent, from the far west of Ireland to the Byelorussian border, the rule of law and pluralist democracy prevailed. The European Union was easily the world’s biggest trading block. Its combined GDP surpassed that of the United States. In the Rome Treaty setting up the European Economic Community, the six founding members had undertaken to promote ever-closer union between Europe’s diverse peoples. That dream had not been realized in full, but it was closer to realization than anyone could have expected when the Treaty was signed.

Yet there was a fly—a big, ugly, angry fly—in the ointment. From the first, the political end point of the adventure, the nature of the institutional architecture that would have to procure and sustain the ever-closer union of which the Treaty spoke, was swathed in ambiguity. Would the evermore-united Europe of the founders’ dreams be a federal state, on the lines of the United States, or Canada, or India, or, for that matter, the German Federal Republic? (As that sentence implies, federations come in a huge variety of guises.) Or would it be a loose-knit confederation, where sovereignty lay with the constituent states, on the lines of the distinctly less than glorious confederacy of former British colonies that paved the way for the creation of the United States itself? That rather obvious question had never been answered.

There had never been a right time to debate the profound questions of constitutional and philosophical principle that the founders of the American republic had debated more than two centuries before. Scarce resources of bureaucratic competence and political leadership could never be spared from more obviously urgent, practical tasks. The European Union made enormous progress in the last two decades of the twentieth century. A mammoth program of national deregulation and supranational re-regulation made a reality of the Union’s commitment to free competition across national borders, drastically curtailing the scope for national vetoes in order to do so. By the turn of the century, the former Communist states of Eastern and Central Europe were well on their way toward membership. Seventeen member states were poised to adopt a single European currency, managed by a single European central bank, in place of their national currencies, handing one of the most crucial aspects of statehood to a supranational authority in the process.

Yet, by what seems in retrospect an astounding failure of political imagination, the constitutional implications of this revolutionary transformation of scope and function were not addressed. After much prevarication and seemingly endless negotiations, the member states agreed on a set of cosmetic changes, allegedly designed to make Union decision making less cumbersome and more transparent. But the ambiguity at the heart of its constitution remained in place. The new, continent-wide Union of the 2000s, with its twenty-seven member states, its 500 million citizens, and its Europeanized currency and Central Bank, was still trapped in the old halfway house between confederalism and federalism. The foundations were patently shifting under the weight they now had to carry; there were cracks in the ceiling and loose slates in the roof. But on the biblical principle of sufficient unto the day is the evil thereof, decision makers averted their eyes and closed their ears. A catastrophe was waiting to happen.

I can’t claim to have foreseen the full enormity of the crisis that brought the Eurozone to its knees in the closing months of 2011. Still less did I foresee the paralysis of will and leadership that greeted it. But I did realize that the first premonitory rumbles of the Euro crisis that could be heard as I prepared my manuscript for publication were political and constitutional in origin, not financial and economic, as they were conventionally thought to be. The crisis of the Euro was, and is, a crisis of the halfway house. It stemmed from a brave but foolhardy attempt to bolt federalism in the monetary sphere onto confederalism in the fiscal sphere: to vest control of monetary policy in a supranational European authority while leaving budgetary policy in national hands. It was as if control over American interest rates were vested in the US Federal Reserve, while fifty separate state governments controlled taxation and expenditure. In other words, it was a nonsense.

As far back as the mid-1970s an expert committee headed by the British economist Sir Donald MacDougall showed that a monetary union could not be sustained without a bigger union budget, with modest resource transfers to the poorer member states—in other words, without a form of fiscal union. Though there can be no certainty, the probability is that Helmut Kohl, the chief political midwife of monetary union, was well aware that the second would sooner or later have to accompany the first, and assumed that the inescapable logic of integration would marry the two. If so, he failed to reckon with the long boom of the 2000s and the delirium that accompanied it. Complacency reigned. Right across the developed world it became an article of faith that the age-old cycle of boom and bust had finally come to an end, that sophisticated financial engineering had banished risk, and that events had confirmed the old laissez-faire dogma that free, competitive markets could and should regulate themselves without interference by the state. In that climate there were no brownie points for asking awkward questions. No one—no one in the Brussels Euro-village at any rate—worried about the nonsense at the heart of the Union’s much-vaunted single currency. Then came the crash and the nonsense was exposed.

The sequel has been long-drawn-out, extraordinarily painful, and fraught with danger. Behind the wild gyrations of the bond markets, the sovereign debt crises of the weaker Eurozone states, the antics of the rating agencies, the harsh spending cuts imposed by unelected technocratic governments, the specter of social crisis spreading across Europe’s Mediterranean underbelly, and the United Kingdom’s cavalier self-isolation from the negotiations that will determine the shape of Europe’s political economy into the 2020s, a brutal reality stands out like a livid scar: the very structure of the Eurozone has trapped its weaker economies in a deflationary vice from which they are not permitted to escape, which threatens to derail the European project itself.

In a normal state, whether federal or unitary, the national budget redistributes resources from the most to the least prosperous regions through a well-established combination of taxation and public spending. The process is often patchy. Occasionally, as in present-day Italy and Belgium, it provokes a backlash in the prosperous regions. Yet, at least to a degree, normal states do temper the harsh wind of economic competition to the shorn lamb of regional need. Taxpayers in the Paris region subsidize the relatively impoverished French southwest. Taxpayers in the London region subsidize Northern Ireland. Since the Eurozone is not a state and has no budget, its shorn lambs have no comparable protection. And since they are locked into a currency over whose value they have no control they cannot mitigate the impact of falling competitiveness on jobs and output by allowing the exchange rate to fall, as the United Kingdom has done on a spectacular scale since the onset of the global economic crisis in 2007. (The state of Britain’s real economy is parlous enough as things are. It would be incalculably more parlous had the exchange rate of the pound not fallen by around 30 percent since its precrisis peak.)

The great question is where Europe goes next. The one certainty is that it cannot stay where it is. A gray pall of fiscal orthodoxy hangs over the continent. Almost everywhere the grim ghost of Friedrich von Hayek, grandfather of the economic ideology that brought the global economy spectacularly to grief in 2008, has trounced the inventive and radical generosity of John Maynard Keynes. With varying degrees of intensity, a downward spiral of austerity and recession is in progress throughout the continent. In Germany, the EU’s chief paymaster and the motor of integration in its glory days, the woes of austerity’s victims in the continent’s Mediterranean and far-western periphery are seen as necessary ingredients in a program of moral regeneration and self-discipline of the sort that bourgeois Victorians imposed on the undeserving poor. The fact that Germany is the chief beneficiary of the Euro, that if she still had her own currency it would almost certainly have shot up in value, pricing German exports out of world markets, cuts little ice among the burghers of the Federal Republic.

A vision of sorts gleams through the murk. It is not exclusively German. Britain’s center-right coalition government subscribes to some of it, and it has plenty of adherents in France. For simplicity’s sake, however, I shall call it the Germanic vision. It holds that the right course for the Eurozone is one of fiscal rectitude, imposed by strict discipline. Those who lack the mettle to stay the course will fall by the wayside. A two-tier Europe will come into being, almost willy-nilly. The top tier of those who remain in or subsequently join the Eurozone will become a fiscal union of sorts; but the union will be rooted in treaty-imposed sanctions, rather than in popular consent. It will be technocratic, not democratic. The people will hardly have a look-in. The bottom tier, outside the Eurozone, will consist of the feckless, the undisciplined, and the spendthrift; they will be left to stew in their own juice.

A caricature? Without doubt, but like many caricatures it sheds light on a complicated reality. Among the interlocking technocracies, private and public, that have shaped Europe’s response to the global crisis and its legacy, a softer, fuzzier version of the Germanic vision undoubtedly has traction. (Further softening can be expected as the crisis deepens. By the early months of 2012 there were signs that German attitudes to the Eurozone’s weaker sisters were becoming more accommodating.) Yet, even in its softest form, it too is a nonsense. Behind it lies the misty, at most only half-articulated assumption that Germany’s very special economic culture, and particularly its visceral fear of inflation, can and should be a model for the rest of the continent: that if only Italians, Greeks, Spaniards, and, for that matter, Frenchmen try hard enough they will become good economic citizens on an essentially German model. It won’t happen, and for those who see diversity and particularity as the essence of European civilization, the assumption that it should is as repugnant as it is unfeasible.

Quite apart from that, the prospect of a two-tier Europe on these lines spells death to the ideals of solidarity and justice that lie at the heart of the European project. An impoverished, resentful, and fragmented group of countries in Europe’s periphery would face a tightening group of rich and successful neighbors across a gulf of jealousy and incomprehension. The likely future of the bottom tier outside the Eurozone would be one of competitive devaluations, creeping protectionism, and populist xenophobia. There, the dynamic of the European project would probably go into reverse. In the top tier the project would turn in on itself. The miracle of a once-wartorn continent united by peaceful give-and-take and consensual power sharing would be over. It would be a tragedy for the whole of Europe, and perhaps the world.

Is there an alternative? Only politics—open, popular, ideological politics of the sort the Union’s founding fathers shied away from—can answer that question. The omens are mixed. The economic crisis of 2008–9 was the second-most shattering in the long history of capitalism, surpassed only by the Great Depression of the 1930s. It might have been expected to trigger departures from the precrisis orthodoxy. After all, that happened in the 1930s: Roosevelt in the United States and Hitler in Germany both abandoned the conventional wisdom of the recent past. (Mention of Hitler is a reminder that new departures can be malign as well as benign.) Even 1930s Britain, conventionally seen as a slave to old orthodoxies, left the gold standard and abandoned free trade, cornerstones of its political economy since the nineteenth century. But in Europe, at least, nothing comparable has happened this time. No substantial political leader has echoed Roosevelt’s call to drive the money changers from the temple. A bemused and defeatist Left echoes the Hayekian conventional wisdom, albeit in a minor key.

Yet no iron law decrees that it cannot recover its nerve and offer an alternative vision of Europe’s future. Crises create opportunities, and the current crisis is no exception. The time is ripe for a European New Deal, based on the principles of solidarity and justice, and covering the entire territory of the enlarged European Union. Such a New Deal would combat the deepening depression by means of an enlarged European budget, on Keynesian lines. Skeptics will say this is impossible. Skeptics thought the American New Deal was impossible before it got under way; and plenty of European skeptics dismissed Jean Monnet’s vision of an integrating Europe as a pipe dream before the Coal and Steel Community won its spurs. A European New Deal would entail fiscal union, governed and legitimized by democratic institutions in place of the current technocratic ones. It would mean abandoning the present halfway house between federalism and confederalism and moving explicitly toward federation. None of this would be easy. But there are no easy options for Europe. If not now, when?

FOREWORD

Ruth O’Brien

TEACHING AMERICAN POLITICS TO Ph.D. students in the United States is always an engaging experience. Understanding how the Constitutional Convention concocted the so-called three-fifths compromise, in which a slave embodied this ratio to reconcile representation between the Southern agrarian slave states and the Northern mercantile free states, leads to lively discussions. Yet addressing the more recent workings of governance is a good way to kill any discussion. By the time we reach federalism, my students begin squirming. Former Supreme Court Chief Justice William Rehnquist’s new federalism doctrine fires up my students much less than Thomas Jefferson, John Marshall, and James Madison.

In The End of the West, David Marquand does not face this disjunction between the origins and governance. In this, the European Project’s sixtieth anniversary year, Marquand provides near perfect pitch, portraying the unmistakable federalist direction that defines the EU’s governance structure that is unfolding no matter what alongside unraveling its very complicated origins.

To do so, Marquand asks, who were the European Union’s founding fathers? Why is there no James Madison leading elevated discussions about virtue and liberty? Lacking a Madison, let alone a Federalist Papers, Marquand provides us with a masterly book that constitutes a different kind of call to action. This book encourages European peoples and politicians to unpack, critically analyze, and ponder the intersecting and interconnecting mazes and webs of ambiguities, contradictions, and outright evasions underlying the European Project, along with the EU’s emergence and transformation in real time.

Marquand makes us face some sobering facts. As the European Project evolved into a quasi-federalist system of governance, its success stemmed from the post–World War II history of a continent soaked in blood and shame seeking to avoid yet another multinational war. Yet, as the prospect of such a catastrophe faded, the European Project fell prey to some careerism and horse-trading even though some visionary leaders followed some of its focused and pragmatic founders.

In pairings, Marquand discusses ethnicity and identity, EU governance and authority, and civilization and territory. Having expanded more than fourfold from the original six to twenty-seven member states, stretching geographically and culturally from Ireland to Turkey, how much farther are they going? Where does Europe begin and end? Being non-ethnic and implicitly anti-ethnic, the European Project may have expelled ethnicity through door only to find it has now come in through an EU window.

Marquand finds it ironic that just as the EU has enhanced its governance and authority, the member states’ publics participate less and less in electing their members of the European Parliament, despite far-right national parties’ stirring up resentment of the ultra-rich, of unemployment and insecurity, of the left intelligentsia, of the political class, of immigrants, and of the EU itself. In the face of all this, along with stresses like immigration, terrorism, and the global financial crisis, can the label European command any allegiance, except as a convenient euphemism for Germans traveling abroad? Might the design of Europe’s bold framers someday face a sectional crisis?

Marquand warns us that the languages of realpolitik and raison d’état, no matter how successful, never come out of a cultural vacuum. Now Marquand fills that vacuum with a grand narrative having the necessary historical sweep. All lies in the past, he points out poignantly. Differentiating between medieval Judaeophobia and the nineteenth- and twentieth-century anti-Semitism that led to the Holocaust, Marquand will have readers pondering: Is the Muslim question reminiscent of the Jewish Question? Or is this a clash of civilizations associated with the tribal democracy that fed Judaeophobia? As the EU expands, can it go beyond the politics of tolerance and multiculturalism and govern on the basis of difference and diversity?

Marquand gives