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While we in the United States are obsessing about our interminable, increasingly weird presidential campaign, a crisis unfolds in Europe that could have far more impact on the kind of world we will inhabit in coming decades.

European Union: A Self-Inflicted Crisis—John Peeler

European Union: A Self-Inflicted Crisis—John Peeler

The European Union (EU), the audacious project to integrate the once warring nations of Europe, is in grave danger of collapse. What started in the late 1940s, in the wake of World War II, as a cautious move toward economic integration among six nations (France, West Germany, Belgium, Netherlands, Luxembourg, and Italy) has, in six decades, become a comprehensive political and economic structure that encompasses most of Europe west of the former Soviet Union. The EU now shapes daily life across the continent, regulating all aspects of the economy and ecology of the continent, presiding over an economy that is second only to the United States by most measures.

While we in the United States are obsessing about our interminable, increasingly weird presidential campaign, a crisis unfolds in Europe that could have far more impact on the kind of world we will inhabit in coming decades.

The United Kingdom has just scheduled a referendum on its continued membership in the EU, after Prime Minister David Cameron negotiated a package of concessions intended to make staying in the EU more palatable to British voters. But it is not at all out of the question that the British could vote to leave (popularly called “Brexit”). Since Britain (along with France and Germany) has been part of the heavyweight triad that has dominated the EU for decades, its departure would be profoundly destabilizing.

Moreover, the EU confronts other major challenges. The deep financial crisis of Greece has preoccupied policymakers for the last several years, as a new leftist government in that country has resisted conventional fiscal discipline that the European Central Bank has tried to impose. Other member countries, notably Spain, Portugal and Ireland, are not much better off than Greece. And the Central Bank has far less power than the American Federal Reserve System—or any modern national central bank—to regulate the economy and the currency.

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As if that were not enough, the political and military meltdown in Syria and Iraq (with echoes across the Middle East and Central Asia) has generated a massive wave of refugees flowing from Turkey across narrow straits to the Greek islands adjacent to the Turkish mainland. From there the migrants seek to reach the most prosperous and stable EU members, especially Germany. This has generated a new wave of xenophobia across Europe, threatening the political stability of many members, including Germany, where Chancellor Angela Merkel’s initial welcome of the migrants has undermined her political support.

The crisis of the EU is rooted in decisions by the national leaders to press forward with three initiatives, while keeping a grossly deficient political system. The first initiative was to continue to deepen integration by pushing for more consistency in economic and social policy, giving the EU ministries more power to push member governments into conformity. The second initiative, simultaneous with the first, was to respond to the Soviet collapse by incorporating as many of the formerly Communist countries as possible, as quickly as possible. This massive expansion created an EU that is far more culturally diverse and with a far wider range of economic development. The third initiative was to create a new European currency, the Euro, and a new European Central Bank, even though not all members agreed to be part of the Euro zone, and even though the new Central Bank did not fully supplant the national central banks and lacked full authority to regulate the member states’ economies.

These sweeping initiatives were taken while leaving in place a political structure that is little more than a structure for regular diplomatic consultation among member governments. There is an elected European Parliament, but it neither elects nor controls the political leadership; nor does it determine most policy. The huge bureaucracy is ultimately responsible not to the parliament, but to the member governments. Those governments make policy decisions by unanimity. The EU has no taxing authority; it depends on the members to pay proportionate assessments to defray the costs of a vast bureaucracy.

It is as if the American founders had stayed with the old Articles of Confederation while the country expanded a thousandfold, became far more ethnically and culturally diverse, and went through the industrial revolution and its aftermath. We would have cracked up long ago.

john peeler

We may be about to see that happen in Europe, with consequences terrible to contemplate.

John Peeler