Is Europe Imploding?

Commentary No. 280, May 1, 2010

Commentary No. 280, May 1, 2010

Europe has had its nay-sayers since it started on the long road to unification. There were many who believed it impossible. And there were many who thought it undesirable. Still one has to say that, in the long and sinuous path it has taken since 1945, the project of European unification has done remarkably well.  After all, Europe had been torn apart by nationalist conflict for at least 500 years, conflict which culminated in the particularly nasty Second World War. And revenge seemed to be the dominating emotion. As of 2010, what is now called the European Union (EU) houses within it a common currency, the euro, which is used by 16 countries. It also has a zone with 25 members, called Schengen, which permits somewhat free movement without visas. It has a central bureaucracy, a human rights court, and is on track to having a president and a foreign minister.

One shouldn’t exaggerate the strength of all these structures, but one shouldn’t underestimate the degree to which all this has represented, for good or ill, the overcoming of nationalist resistance throughout Europe, especially in some of the stronger states. Yet, it is also the case that right now Europe seems in some important ways to be imploding. The code words for this implosion are “Greece” and “Belgium.”

Greece, as all the world is aware, is undergoing a severe sovereign debt crisis. Moody’s has declared Greek state bonds to be junk bonds. Prime Minister George Papandreou has said, very reluctantly, that he would probably have to turn to the International Monetary Fund (IMF) for a loan, a loan that would imply the usual IMF conditions requiring specific forms of neoliberal restructuring. This idea is very unpopular in Greece – a blow to Greek sovereignty, Greek pride, and especially Greek pocketbooks. It was also greeted with dismay in a number of European states that feel that financial assistance to Greece should come first of all from other EU members.

The explanation of this scenario is quite simple. Greece has a big budgetary deficit. Because Greece is part of the eurozone, it cannot devalue its currency to alleviate the problem. So it needs financial aid. Greece asked for European aid. The biggest and wealthiest European country, Germany, has been highly reluctant, to say the least, to give such aid. The German public is strongly opposed to helping out Greece, basically out of a protectionist reflex in a time of European stress. They also fear that Greece is the first of a line of others (Portugal, Spain, Ireland, and Italy) who will make similar demands if Greece gets such aid.

The German public seems to wish it would all go away, or at least that Greece somehow be thrown out of the eurozone. Aside from the fact that this is legally impossible, the country that would suffer most as a result, besides Greece, is surely Germany, whose own economic health is largely based on the strong export market it has within the eurozone. So, for the moment, we seem to be at an impasse. And the market vultures are hovering over all the eurozone countries that are in sovereign debt trouble.

In the midst of this, the now perennial Belgian crisis has reared its head in a particularly acute way. Belgium, as a country, came into existence as a result of pan-European politics. The collapse of the Habsburg empire of Charles V resulted in the partition of the so-called Burgundian Netherlands into the United Provinces in the north and the Austrian Netherlands in the south. The Napoleonic Wars led to the two parts being put together again in the restored Kingdom of the Netherlands. And the European conflicts of 1830 led to the two parts being split apart again, with the creation of Belgium in more or less the erstwhile Austrian Netherlands, with a king imported from elsewhere.

Belgium was always a composite of Dutch-speaking “Flemish” and French-speaking “Walloons,” largely but imperfectly located in two different geographical sectors (the north and south of Belgium). There was also a small German-speaking zone.

Up to 1945, the Walloons were the more educated, wealthier ones, and they controlled the major institutions of the country. Flemish nationalism was born as the voice of the underdogs fighting for their political, economic, and linguistic rights.  After 1945, the Belgian economy underwent a structural shift. Walloon areas lost strength and Flemish areas gained strength. Belgian politics became as a consequence a never-ending struggle of the Flemish to obtain more political rights – devolution of powers, with the ultimate objective for many of dissolving Belgium into two countries.

Bit by bit, the Flemish got more and more of their way. Today, Belgium as a country has a common monarchy, a common foreign minister, and very little more. The sticking-point in this arrangement is that Belgium is now a confederal state with three, not two, regions – Flanders, Wallonie, and Brussels (the capital).

Brussels is not only the capital of Belgium. It is the capital of Europe, the locus of the European Commission. Brussels is also a very bilingual city. And the Flemish are insisting on making it less so. The problem is that, even if there were to be agreement on the dissolution of Belgium, there would be no easy way to arrange the fate of Brussels.

The latest negotiations were so intractable that Le Soir, Belgium’s leading French-language newspaper, proclaimed that “Belgium died on April 22, 2010.” Their lead editorialist asked “Does this country make sense anymore?” At the moment, the king is trying, perhaps vainly, to recreate a government. He may have to call new elections, without much hope that the elections will produce a really different parliament. On July 1, Belgium assumes the rotating six-month presidency of the EU, and it is not certain there will be a Belgian Prime Minister to preside over it.

The Greek problem is the problem of spread. Will Greece’s difficulties not be replicated – are they not already being replicated – elsewhere in Europe? Can the euro survive? The Belgian problem presents however an even greater problem of spread. If Belgium comes apart, and both parts are then members of the EU, will not other states consider coming apart? There are after all important secessionist or quasi-secessionist movements in many EU countries. Belgium’s crisis could easily become Europe’s crisis.

Of the two threatened implosions, the one symbolized by Greece is easier to solve. It basically only requires that Germany realize that its needs are better met by European protectionism than by German protectionism.

The Belgian crisis poses a much more fundamental question. If Europe were ready, right away, to move forward to a truly federal state, it could accommodate the break-up of any of its existing states. But it has not been ready up to now. And the world’s collective economic difficulties have much strengthened the narrow nationalist elements in virtually every European country, as all the recent elections have shown. Without a strong European federation, it would be extremely difficult for Europe to survive a stream of break-ups. Amidst the political havoc, Europe could go down the drain.

There is a certain Schadenfreude among U.S. politicians about Europe’s difficulties. What may however save Europe from any implosion is precisely the ever-increasing threat of the implosion of the United States. Europe and the United States are on a seesaw, on which as one goes up the other goes down. How this will play out over the next two to five years is not at all clear.