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ALLIANCE FO§ DEMOCRACY
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Europe’s Faulty Design

Despite its successes, the EU is not a stable system. People have long been helping to make it stable in the name of solidarity by plastering it with money. However, Europe is aging and growth is weak. Christoph B. Schiltz’s approach is not working any more.
On Thursday, Angela Merkel said something worth noting in relation to the euro crisis: "The world is watching us." But what does it see? A "Europe without Europeans" (Ulrich Beck). A common system of law which has blatantly violated its rules in core areas such as the Stability Pact and the no-bailout clause. A union with increasing income gaps and a dramatic lack of legitimacy among large segments of the population. An entity with no clear answers about its purpose: What are the borders of the EU? How should national and supranational powers be balanced? When will the mission to “overcome the division of the European continent” be complete, as the preamble to the Treaty of the European Union so beautifully states? The world is watching a European Union that is eroding from within, despite the well-oiled system of laws and the bustling corridors of EU institutions. The EU may go down the drain. Savvy Europeans may dismiss this view as apocalyptic. Surely it can last another 10 or 15 years. But then what?
The debates leading up to the EU summit are symptomatic of the state of the Union. It is becoming routine in Europe to hear debates that go on for days about the “finger” of Greek Finance Minister Varoufakis, an embarrassing private feud between Varoufakis and his German counterpart, Mr Schäuble. Reparations demands from Athens opening old wounds. Merkel has now pulled the emergency brake and unceremoniously invited Prime Minister Tsipras to Berlin, to put an end to this undignified spectacle as quickly as possible. Greece is on the brink of bankruptcy.
The EU, including the Eurozone, is a system full of design errors, despite its undisputed successes. For a long time, this didn’t matter. Europe, together with the United States, was unchallenged in a manageable world. There was always plenty of money. Transfer payments surged. Communism had been defeated. Internal naysayers like Great Britain were placated with all type of special agreements and “opt-outs.” There was no room for crises in this ideal European world. Discord and undesirable developments were plastered over with money in the name of European solidarity. The world has changed rapidly in the meantime, but Europe is stuck in the middle and continues to repeat past mistakes. In contrast to the past, the world is now competing for capital, labour and resources. All EU states are struggling with budget problems, and the pressure of networking within complex systems has greatly increased. What did the EU countries do wrong? They needed to move closer together. The European Union's main problem is that most of the member states were not prepared to waive important sovereign rights. There are now repercussions for this deliberate failure to integrate. These repercussions can be seen in the currency union, in the immigration problem and the fight against terrorism, as well as in foreign and defence policies. The more “nationalistic” the political and economic union is, the more fragmented, egotistical and complacent it is. And there is plenty of room for freeloaders.
This is Europe’s great dilemma: On the one hand, more consolidation is necessary, i.e. more shared powers, more voting together, more joint intervention and more joint control; on the other hand, more and more citizens are rejecting all of this, the Europe protest movements are become stronger, and resentment against the amorphous behemoth Brussels is growing. The irony is that this euro-scepticism is being fed by the misconduct and faulty design of the past. Today, nearly half a generation growing up in many parts of Southern Europe is unemployed. This should never have happened in a common currency union. Such a gap in prosperity and wealth between members of this same currency union should never have happened. Due to these serious design flaws, the Eurozone is now a shared system of internally distorted exchange rates, undesirable developments and increasing social disparities. The marginal repair works carried out with great fanfare in the area of procedural law, such as the “tightening” of the Stability Pact and Growth Pact, have changed nothing. In order to preserve the Eurozone, it would have to be urgently rebuilt so that it has a single fiscal and economic policy with a single Finance Minister. This would be the end of the sovereignty of the states as we know it. This would be an imposition, a quiet revolution. Is that what we want?
The German chancellor, with her “Competition and Growth Pact,” took a big step in that direction in 2012, but it failed. Only in the summer, when EU Commission President Jean-Claude Juncker presents his new report, will the discussion on reforming Europe and more power sharing be revived.
In the end, it will come to nothing. The cost of a dysfunctional EU will be high. This especially applies to monetary and fiscal policy. The burden of financing the crisis will steadily rise in the coming years and be borne on fewer shoulders, with Germany in the lead. How could this possibly work out?
On Thursday, Merkel implied to Tsipiras that Athens was facing quite a feat of strength. The same is true for all of Europe. The gruelling path to the rescue of Greece, which can only succeed at a high financial cost, should not distract our attention from the real problem children: France and Italy. To bring these countries, with their chronic structural economic weaknesses and exorbitantly high level of debt, under control would require something more than a Stability Pact full of ambiguous clauses. It requires a Europe that functions. This article appeared in Die Welt Kompakt on 20 March 2105 as the lead story: We are passing it on to you just as Die Welt posted it, including all errors and accompanying travel ads – it has become a bad habit of what is called journalism in the age of electronic data processing to tag a few ad banners to articles.
We are passing the article on in its original form to make clear that we have not inserted anything into the content and are glad to see that the press is finally reporting on the repercussions of the faulty design of the EC.
Politicians must have a reason for concealing this. The German press were not reporting in a coherent and comprehensible manner on the design errors committed by Kohl, Mitterand or Theo Waige, to whom the name “euro” is attributed. Nor did they report on the continuation of these errors right up until there was a boycott of reforms in a completely different political arena with the actors now being Merkel, Juncker and Barroso, and agencies like the IMF.
We have denounced the lack of reporting since the introduction of the euro to the German Press Council, and even sent a letter, but never received a reply. This further strengthened our suspicion that journalists have received orders from on high not to report on these issues. This keeps the people in the dark about the ailing condition of the German and European budgets. The debate about Greece leaving the debt union has set the ball rolling, however. How Merkel’s government intends to squirm out of this one and keep the debt union alive at the cost of the German people remains to be seen. This will make the euro weaker and weaker and help bring more poverty and despair to the European Union, which was once a strong economic union but, due to arrogance, followed the wrong leaders and their ideas. These leaders should be under criminal investigation and it is time to establish a legal venue to do this.
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