As the drama surrounding the crisis of the euro continues to unfold, the struggle to reach a common platform for dealing with the challenges in Europe has become a daily preoccupation across multiple capitals. The admonitions and exhortations coming from everywhere – now including China – to get the key European countries to stop sending mixed signals to themselves and the markets have grown louder. World Bank President Robert Zoellick delivered his messages (See:Speech Transcript) to Europe this week, but also to the US and Japan, citing their collective failures to see the ugly truths around them – the need to make hard choices in dealing with debt and reforms of domestic spending. Treasury Secretary Geithner joined his European counterparts in Poland today to discuss shared transatlantic economic miseries, emphasizing that he was in no position to lecture the Europeans about their problems, given the sad state of affairs in the US. But then he went right ahead and did just that.
Re-elections holding back a response?
The struggle involves not only finding a coherent and effective response to the threats of a global recession. It requires political leaders to find a way to present their plans to an increasingly skeptical public, weary of more public spending of their tax money and yet aware of the need to find a shared solution to the risks everyone is facing. Political leaders are talking to each other about options while constantly having to look over their shoulders to see whether they have a sufficient basis of support at home to sell a policy.

Many of them are also looking at political clocks. France has national elections next year and President Sarkozy is not confident of winning reelection. Chancellor Merkel will be casting a side glance at the city elections this Sunday in Berlin to see what those results bode for the future of her fragile national coalition with the FDP in the next elections in 2013. And of course President Obama is – or should be -worried about his prospects for reelection next year.

The fact that there is a degree of shared vulnerability when it comes to economic instability does not automatically generate common cause. In fact, one of the greatest challenges in Europe among the countries using the euro is securing trust in the fact that each member is reading and acting according to the same assumptions, rules, and expectations. The uncertainty about that challenge is impacting demand, investment, job creation, and overall confidence. The continuing battles in Washington now looming over the so called Congressional super committee − charged with forging long-term debt reduction − is only one illustration of the vicious circle moving on both sides of the Atlantic. The lack of political resolve in Europe is a mirror image of the dilemma caused by the clash of domestic worries with the urgency of the risks of global economic decline.

Same Old Story
The usual accusation directed at the Europeans is centered on the lack of a political instrument to coordinate fiscal policy and responsibility – the congenital defect of the euro system. The recognition that the problem exists has been there for the decade long existence of the euro, but the dramatic danger of the Greek problem, mixed with the threat of contagion of that problem, has brought it into stark relief. Nevertheless, finding common policy ground is seriously difficult. One saw that this week both within the Berlin coalition government in differences over the outlook for Greece’s fiscal future and in the clash between Berlin and Brussels over the option of Eurobonds as a viable instrument to deal with it. Chancellor Merkel and her deputy Phillip Roessler had a public disagreement over what lies ahead in Athens, while the President of the European Commission Barroso declared that Euro Bonds are the face of the future for Europe. Merkel was not amused.

Resolving this question is going to take time – a lot of time. It has taken Europe over a half century to get to where it is now – an impressive accomplishment no doubt when one measures where it was during the first half of the 20th century. The pooling of national interests, policies, and indeed sovereignty, has been one of the greatest achievements in the history of international relations. However, one has to recall that the catalyst for taking that step came out of the ashes of World War II. Leaders proclaimed that Europe would never submit to the temptations of war again – and built extensive barriers and bridges to prevent them.

Introducing the first common currency in Europe since the days of Charlemagne was an additional step along the road to a greater European project, but it has, as other steps taken in the past, met obstacles. The Europe of 27 countries today was not a given in past years, and struggles over coordinating national policies remains a core challenge across a number of areas. Yet, that has not prevented the project from moving forward, as anyone visiting Brussels or Strasbourg can see.

The Perfect Storm
Nevertheless, the economic storm we are currently sailing through does not provide an atmosphere conducive to presenting large steps to a fearful public. The advantages of Europe as both a vision and a reality are not as self-evident when people worry about their jobs, their money, and their future. Risk aversion becomes a more comfortable choice, as political leaders can be susceptible to following their peoples rather than leading them.

Political choices are often driven more by events rather than by long deliberation. Just as the choice to build a new Europe following World War II was generated by the reality of catastrophic disaster, so was the effort to expand Europe a result of the end of the Cold War and the fall of the divisions which had prevented it.

Taking a History Lesson
How will events shape choices today? One might take a look at the history of the US to find some references.

When the US was born, it was a collection of thirteen colonies trying to form a common bond. That effort continued to expand over the next seventy years to include ever more people wishing to join the union of states. It seemed that becoming part of that union was advantageous. Even those instances when a region had declared itself an independent country – Texas or California – there was still a desire to become a state of the expanding Republic.

Then that momentum drew to a horrific halt while Americans spent four years killing each other in a civil war, leaving more than half a million citizens dead − more Americans than we were to lose in any other wars, past or future.

In the wake of that tragedy, including the murder of a President, the effort to reforge a national purpose began the momentum again. More states became part of the union under the assumption that they wished to share in a common destiny, but also in a common set of obligations to each other. That drive led to an ever more complicated network of institutions, policies and inter-dependencies which define the United States today. For example, we all pay the same income tax on the same day to the same government. We are all subject to a Federal Reserve, which regulates our money supply. And we all know that all fifty states have a mutual interest in seeing to it that we don’t cause each other a lot of trouble – but that we need to help each other when we run into problems. That was true at home or when we went to war.

Even though we have vitriolic arguments about these arrangements – as we are having now – there is really no choice about the union. We settled that in 1865.

Finding Common Ground
How Europe might evolve in such a direction cannot be measured by American experiences. The American path was formed with many different advantages Europe in 2011 does not have.

Yet one has to think that the vision, the motivation, and indeed the interests in forging a path of interdependence – as successful as it has been to date –will have to find a way through this current set of challenges. Chancellor Merkel made an impassioned speech about that regarding Germany last week in the Bundestag. ( Brian-see if you can link to that here) There are not that many leaders in Europe today who can make the case as strongly with the same clout or influence. But it will take a lot more arguments and a lot more time to move through the current challenges. There is a precedent. It has been done before. While it will not have to be generated on another war, forging a European purpose will need take a candid look at rising tensions across the continent.

Failure to actually act on Greece, on Italy, on Spain, etc, could lead to a collapse of the very institutions that were meant to bring stability and peace.

In 2009 after years of arguments, the European Union managed to agree on what is called the Lisbon treaty to move Europe in the direction of deeper integration. It has been and will continue to be a long journey, interrupted by problems and crises. But based on the earlier lessons of European history, the decision to move forward is the best and most promising choice.


This essay appeared in the September 16, 2011 AICGS Advisor.