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In the London Review of Books, Jan-Werner Müller, who teaches politics at Princeton, diagnoses the deep structural problems of the European Union that led to the fiscal crisis in Greece. Müller contends that “the Eurozone does not operate according to a system of rules but on the basis of ad hoc deals between national governments.” Here’s an excerpt:
Whatever happens in Greece, it doesn’t alter the fact that the Eurozone suffers from deep structural problems. Contrary to Germany’s wishful thinking, it doesn’t work as a rule-based system. But it is also incapable of doing politics in such a way as to avoid pitting nation against nation. The underlying economic and financial problems are by now well known. Frankfurt’s one-size-fits-none monetary policy led to a credit binge in Southern Europe and Ireland during the first ten years of monetary union. The promise had been that the euro economies would converge; instead, North and South drifted apart. Since most of the borrowing was private, none of the alarms set up by the Stability and Growth Pact of 1998 – which focused on public debt – were set off; indeed, it was France and Germany, at that time ‘the sick man of Europe’, which violated prohibitions on public borrowing. Jacques Chirac and Gerhard Schröder conspired to soften the relevant regulations as necessary…
Is a different EU possible? In theory, there is a scenario in which European elites simply throw in the towel, admit that the euro was a mistake and that, as it turns out, hardly anyone wants an ‘ever closer union’. In a democracy, it should not be a problem to repudiate a failed policy; democrats pride themselves on the fact that they, unlike authoritarians, can own up to and correct their mistakes. Yet many European politicians, Merkel above all, seem to have so little confidence in European integration that they think one reversal will be fatal to the whole project. On a more practical level, no one can predict the costs of the dissolution of the euro (or the level of technical difficulty: as Offe points out, 153 exchange rates would have to be fixed at the same time). In any case, there is no majority for calling it quits in any of the euro-states.
Image of Angela Merkel via Dealbreaker.com