Realpolitik #6 – Is Europe going backwards?

I didn’t realise until now, but everything I’ve written previously has been focussed on America. Breaking things up a little and writing a bit about the EU.

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When the European Union was established in 1993, academics, journalists and politicians alike heralded the coming of the next wave of globalisation – regional integration. Since then, we have seen a number of other regional organisations pop up all over the world – NAFTA in North America, ASEAN in Southeast Asia, Mercosur in South America, etc. For the longest time, it looked like regional integration was the way forward for world politics, as states continued to give up their sovereignty to these organisations. And then the financial crisis hit.

There’s no need to go through the finicky details of just how severely the financial crisis has affected Europe; news programs do that adequately. Suffice to say that of the 27 EU member states, a number have been brutally damaged; Greece, Spain, Portugal and Ireland are the most notable of these ailing states. At the moment, the various governments of European states are trying to convince their electorate that a bailout package for Ireland is in the best interests of everyone. And boy, it’s a tough sell.

Germany has the strongest and most stable economy in Europe. As such, Germany is expected to take the lead on approving a bailout package for Ireland. Chancellor Angela Merkel now has the unenviable duty of convincing both the voting public and the caucus that stabilising the economic and monetary union is a vital issue. Merkel has yet to make a statement, but with bailout proposals forthcoming by the International Monetary Fund and the European Central Bank later this week, it seems inevitable that she will soon make a public justification of her policy.

Merkel and Sarkozy - two of Europe's most powerful leaders.

Merkel already expended political capital in pushing through an assistance package for Greece. It is assumed that the Irish bailout will be approved sooner rather than later. But then comes Portugal, and soon after that Spain; how can a domestic politician justify an enormity of spending that has no ostensible effect upon his or her most important constituents, the voting public?

Gideon Rachman predicts that the GFC signifies the end of the eurozone – and he believes that the Germans will set the wheels in motion. His prediction is not without its merit. Germany finds itself torn by the GFC – they are receiving untold scorn and derision for their reluctance to bail out the suffering economies of Greece and Ireland. But how can they be blamed? The Bundesbank has done remarkably well in steering Germany out of the financial crisis that crippled so many nations – and all of this hard work must now be flushed down the toilet to save a bunch of foreigners who, in all likelihood, will never pay back the massive loans that they’re in the process of being given.

The global financial crisis is the first true test of globalisation, and Europe is the test case. I am sceptical of just how adequately the EU will deal with the crisis while maintaining its monetary and economic union which, up until now, has been remarkably successful.

Both Rachman and Severin Weiland of German news magazine Der Spiegel are predicting the rise of nationalist, ‘eurosceptic’ parties who, in Rachman’s indelicate terms, ‘will stick two fingers up to the EU.’ This is a very real possibility. Irish nationalist party Sinn Féin appear close to winning a by-election in a region where they haven’t held a seat for more than 50 years – and it is quite conceivable that similar phenomena will start to occur across Europe.

Panicking on the streets of Dublin.

For what it’s worth, I support the EU and what it stands for – and I hope the financial crisis doesn’t prove to be the cause of its demise. While Germans are not to blame for feeling hard done by, I believe the GFC also presents an opportunity to the EU – an opportunity to implement a crisis framework should a similar crisis beset its members in the future. One of the financial crisis’ biggest stories was the lack of adequate regulatory framework, especially in the financial sector – we have seen organisations from the G-20 to Basel III move to address this, and it is encouraging to see the EU doing the same, establishing a crisis fund in case of future disasters.

Ultimately the decision is up to the EU’s strongest states; Angela Merkel and Nicolas Sarkozy of France must take control, and show their nations that the EU’s strength is in its unity, and a crisis in one country could easily trigger a crisis for the other 26. If they can take strong, decisive action to ensure that the EU holds firm in this testing time, then I daresay that Rachman will be wrong and no-one will be eulogising about the EU for a long time to come.

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About Rage
Australian student with interests in music, film, literature, politics, pop culture and more.

3 Responses to Realpolitik #6 – Is Europe going backwards?

  1. Posting on a Wednesday, huh?

  2. Rage says:

    I had plans for today; then those got cancelled, and I feel a bit of an idiot.

  3. Actually, it’s great. I took the day to edit the podcast. 😀

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