Forged out of the ashes of the Second World War and the end of the
Cold War, the European Union was meant to create peace and prosperity
across the region. But Europe's debt crisis has laid bare deep financial and cultural divisions within the 27-nation bloc that may never be bridged.

 

 

The
fateful decision to make the EU effectively a halfway house - tying its
member countries into a joint currency and interest rate decisions,
while allowing them to retain control over national budgets and taxes -
has left the fractured grouping at a crossroads.

 

Further
political and economic integration leading to a common treasury - a
central government, in effect - could rescue the ailing 11-year old
euro currency, and some say now is the time to seize the moment.

 

But
what the head orders is not always what the heart desires: Greeks,
Germans and even eurozone outsiders like the British are fiercely
protective of their independence, their languages and ways, including
the right to decide how they spend their own tax dollars.


As the possibility of EU disintegration - or a split among its members - looms larger, the current crisis
may just have exposed the futility of ever trying to establish a United
States of Europe. The recent agreement by member governments to put up
US$1 trillion in loans and guarantee to backstop troubled governments
remains only a short-term fix to stave off bond market panic.


The
current union “was an attempt to put together countries that really
weren't ready to be put together,” said Stephen Lewis, senior economist
at London-based Monument Securities.


“The euro can go limping on
for a while and they'll try to enforce the packages for the deficit
countries, but ultimately there'll likely be a social explosion amid a
sense of hopelessness.”


Publicly, several leaders in the bloc
are doing all they can to avoid this “end of the EU” scenario, talking
up the benefits that come with a stable political and economic bloc
representing half a billion people - seven per cent of world consumers
- and a fifth of world trade.


Germany's foreign minister, Guido
Westerwelle, stressed this week that “European unification, the success
of Europe, remains the foundation of German foreign policy.”


“We are convinced Europeans - I would even say that we are European patriots,” he said.


In
many ways, Europe is not as dissimilar to the United States as it may
appear: the US is by no means a unitary state. It is less coherent than
the EU, for example, on issues like the death penalty and also has wide
differences among state budgets.


Jack Lang, a longtime French
government minister and advocate of Franco-German co-operation, is
among those pushing for Europe to move closer, with France and Germany
setting an example. He wants the two countries to share government
ministers, universities, companies, defence projects.


“We must move to a higher speed, project ourselves, be futurist,” he said.


But
the EU is also an organization that took 15 years to decide the
definition of chocolate and has engaged in disputes over everything
from beef to asylum seekers.


The crisis
currently engulfing the bloc is a product of its own cautious creation.
The Maastricht Treaty of 1993 that ushered in the euro set up a
monetary union. But, wary of demands for national sovereignty - a
concept as old and as treasured as international politics - it did not
order control over how members raised and spent their taxes.


Members
instead agreed to a Stability and Growth Pact, limiting budget deficits
to three per cent of gross domestic product. Policing of the pact
equated to little more than a rap on the knuckles for offenders, of
which there have been many. Greece, which lit the fuse for the current crisis, was far above that limit during the “good years” and it has been joined by many others since the downturn.


A
fiscal union, where budgets and taxes are decided centrally, would
prevent member nations from running up big deficits and allowing money
to be diverted across the bloc as needed.


A major stumbling
block is the fact that Europe is a geographical, not a cultural term.
Differences in national characteristics are profound and deeply
sensitive in a grouping that has 23 official languages. French
linguistic pride is manifested in laws that make it illegal to play too
many English songs on the radio. Austria's religious tradition
preventing stores from opening for trade on Sundays would horrify many
Britons who view extended shopping hours as a national entitlement.
Italians lingering over an afternoon coffee contrast with
clock-watching workers in Germany.


Recently retired science
teacher Gerard Blanchet was 11 when American troops liberated his town
in Alsace from Nazi forces, and still tears up at happy memories of the
war's end. He's a staunch supporter of a peaceful Europe, a Europe that
co-operates - but not so keen on one that shares a single treasury and
budget.


“I adore Americans, I adore America. But Europe is not
America,” Blanchet said in Paris. “How many languages do you need to
know to go from California to Maine?”


“We are after all
different in our definitions of things, how much we want to spend on
health care, on schools, on culture,” he added.


Many blame these
differences - cultural bleeding into financial - for exacerbating the
current mess. Resentment is fostering among Northern Europeans, used to
long working hours and subjected to tighter spending constraints by
their governments, who are paying for the profligacy of their
neighbours in the south, where the sun shines and siestas are an
entrenched part of life.


“Now maybe it will be those countries
that have managed their economy well that will pay for those who have
mismanaged and that is not a fun thought,” said nurse Kirsten Larsen,
66, in Stockholm.


This rough north-south divide opens up a
potential third way between the creation of a monetary union and the
total dissolution of the EU: splitting the bloc in half.


A new
currency region centred around Germany would, some argue, be both more
financially and culturally palatable. The terminology already doing the
blog rounds for the putative currencies reflects the stereotypes - the
northern “neuro” and the southern “pseudo.”


But this solution
would be devastating for the countries included in a new southern zone.
One survey suggests that the living standards of inhabitants would drop
by 30 to 45 per cent, which perhaps makes it unsurprising that
Spaniards are more positive about the future of the EU than their
northern neighbours.


“It's quite a difficult moment on a world
scale and they have to look for solutions together, not emancipate
themselves or leave the euro system,” said Francisco Muniz, a
43-year-old concierge in Madrid. “At the end of the day the European
Union is all of us.”


The attitude is the same in Italy, which
has historically has been overrun from all sides, from Napoleon to
Spain and where a common saying reflects a take-it-as-it-comes
attitude: “France or Spain, what is important is to eat.”