“People will tell you next that Europe is not in a crisis,” Luxembourg Prime Minister Jean-Claude Juncker, who holds the EU presidency, said after a two-day summit ended in acrimony. “It is in a deep crisis.”
As someone who is ‘crisis prone’ I would have imagined I would share that feeling. Somehow I don’t.
Some reasons why.
Of course ‘crises’ abound, and especially those looming on the economic front, but I don’t really see any of these being drastically affected in the short-term by the absence of underlying consensus which has been so much in evideence in recent days.
The Constitution has been effectively shelved. Put-in-store to await better days. My feeling is that it will never re-emerge in its present form. That is no bad thing. French and Dutch voters have expressed a strong opinion against something (you can take your pick as to what) and it would be a rude insult to their voiced opinions simply to carry on regardless.
We are now in a period of reflection. I doubt we will see the kind of Europe wide debate that Henry Farrell was hoping might emerge. I suspect that national issues, and national politics, will now play a somewhat larger role – the French defending their agriculture, the British their rebate etc. Some – the eurosceptics – will doubtless be happy with this. On the other hand. some of the the underlying issues of what Europe is really about, if not actually debated, will need to be resolved.
“During this budgetary debate there were two conceptions of Europe that clashed and will always clash,” Juncker said.”There are those who, in fact without saying it, want the big market and nothing but the big market, a high level free trade zone, and those that want a politically integrated Europe,” he said.”I have felt for a long time this debate would blow up one day.”
Actually more than a clash between ‘Europeans’ and ‘Free Marketerrs’, this is a question of what kind of relationship people expect between citizens and government and between government and ‘market forces’. If we had a consensus on these two, I think we would find the opposition to a ‘politically integrated Europe’ would be a lot less than it appears to be. ‘More political integration’ begs the question of the relation between state and civil society.
Anyway, the Constitution is dead, so long live the constitution!
What is dead, even if the European Council couldn’t bring itself to openly recognise it, is *this version* of the constitution, this ‘way of doing’ things even. In the short term I wouldn’t be expecting dramatic developments, but with the healing impact of time, a change of faces, and some new ideas, something else will emerge to fill the void. The world is not becoming a more comfortable place. Global challenges abound, and we Europeans have shared traditions and values which have a part to play on the global stage. With the arrival of nations like China and India which will make even the US look small, it is only by sticking together that we can make our voice heard. This evident reality made something like the ‘constitution process’ inevitable, not, as some have suggested, to avoid another war here in Europe (I think this is among the least likely of scenarious) but to increase the possibilities of having our voice heard when it comes to the major issues of the day, climatic change, ageing, globalisation and free trade, poverty, terrorism etc. So the ‘reality principle’ means that the process is far from over. The constitution may be wounded, even seriously so, but it is far from dead.
It was always pretty unlikely that any substantial agreement was going to be reached this week. I had kept my options open, since with these things you never really know, and there was a lot of talk and rumourology on either side. But with the benefit of hindsight (which always makes things easier to see) it is plain that the constitution ‘wounds’ need time to heal, and that in the fractious atmosphere which has followed the ‘Non and the Nee’ it was not possible (and even not advisable) to take long-lasting and important decisions. So, despite the fact that there will be difficulties which arise from the very uncertainty surrounding the future budget, non-agreement is not the end of the world.
Given that the UK is one of the principal protagonists, it seems unlikely that this issue which will advance much under the British presidency, and the six months ‘time out’ may well serve to create an atmosphere where agreement can be reached. Not least amongst the ‘wild cards’ here is a possible change of government in Germany.
Really the pressing item on the agenda, was in fact the one which was not discussed: an evaluation of where we are going with the common currency. This is clearly rather more urgent for those who have the currency (12 of the 25 states) than it is for the rest. Ironically yesterday, the day of the ‘deep crisis’, the euro had its ‘best’ day in weeks, rising by nearly a cent against the dollar, and this despite the fact that continuing uncertainty about interest rate policy at the ECB, and a surge in oil prices, make the growth outloook weaker rather than stronger in my view. The ‘culprit’ was of course the worsening state of the US trade deficit, which caused the dollar to weaken. I can’t help feeling that we may be in a ‘worst of both worlds’ situation here, with the dollar unable to ‘correct’ due to continuing euro weakness, whilst the euro is in turn unable to fall, and in so doing begin to resolve the growing deterioration in some member-state trade accounts, or offer some badly-needed relief to the eurozone domestic economies.
Amongst the euro issues, pride of place must go to the Stability and Growth pact, and it is here, rather than with the constitution process or the community budget that we may find ourselves confronted with a true feeling of urgent crisis. Italy will increasingly occupy centre stage. In the first place because Italy has entered an important structural (not cyclical) recession from which escape seems difficult using the techniques available under the common currency. Secondly Italy’s huge government debt (106%) of GDP have made it the number one target of the EU Commission in the battle over the SPG. When an immovable force presses against an unyielding object: if you are looking for crisis, I would start over here.
However whatever the level of ‘alert’ your ‘crisis-ometer’ is currently registering, one thing is sure, the debate will continue, and controversy is guaranteed. According to the Financial Times, in the next six months we may not make much progress with the constitution, or with the budget reform, but:
“Britain is keen to get the European Union to approve a wide range of initiatives……….. including the start of talks over Turkey’s entry into the EU and passage of the services directive.
I would simply love to be a fly on the wallpaper when they have these meetings.