Busker in Thessaloniki. Ira Gelb/Flickr. Some rights reserved.As for any social and political crisis, a particular revelation force seems to be essential. For the current difficulties of the European Union, this is true as well. By jeopardising the very existence of supranational institutions and by weakening their credibility and legitimacy, the Eurozone crisis discloses the fragility of the integration process and its peculiar ambiguities.
Although the Common market program and the Monetary Union promised almost eternal prosperity, increasing social convergence and stable political cohesion to the people, in reality the opposite occurred: Social inequality deepened tremendously, Europe-wide as well as on a national scale, and especially within the peripheral countries.
Moreover, the political unity of the EU today is in acute danger of disintegration. This, however, is not primarily due to Greece’s difficulties, as public discourse in Europe currently suggests. Crucial aspects on the origins and the dynamic of the crisis are regularly concealed. This leads to a rather distorted view of the real disaster the European Union is facing today. In order to more accurately grasp the actual challenge, which the crisis bears for the integration process and the future of the EU, it is indispensable to broaden the perspective by focusing on the crisis’ causal complexity.
There are at least three structural roots of the crisis, which are left mostly unspoken in the current debate. The first complex regards the existing social cleavages and its reproduction mechanisms. The peripheral countries of the South had shared traits: They started economic and social modernization only a few decades ago, mostly based on foreign investments and later propelled by expanding public debts. The hasty catching-up process began in the 1970s and 1980s, nevertheless it reflected continuity of peripheral backwardness: The South European periphery’s GDP per capita in the 1950s was 53% of the West, in the 1970s it reached 68% and in 1998, 82% of the West European average.
Nevertheless, unemployment rates, especially among the youth, for decades remained (and still remain) on a high level in almost all Southern countries. Economic productivity continued to be relatively low. The comparative figures of foreign trade are telling in this regard, especially for the Greek economy: While the EU-15 countries in 2004 import and export in total 32% respectively 34% of their GDP; the Greek import amounts to 25% of GDP, but its exports amounts to less than one-tenth (8%).
In Greece a modern, competitive industrial sector did not emerge. Two services branches, tourism and shipping, produce the bulk of the country’s income. The extraordinary economic dynamic, which gained momentum since the 1990s, was mainly due to debt-ridden over-spending and over-consuming. After 2008, when the international financial crisis disrupted the world economy, a race to the bottom began in Greece.
At the same time the weakness of the institutions – often combined with peripheral backwardness - became evident: Clientelism and corruption as well as tax fraud and an ineffective but costly welfare service, obstructed further social and economic modernization. In sum, social and economic inequalities in Europe did not bolt from the blue. The EU’s promises to stimulate economic prosperity and social convergence in Europe by market building and deregulation, however, remained unfulfilled.
Second, the persistence of sharp asymmetries between centres and peripheries in Europe is partly due to the integration process itself, especially with regards to the Monetary Union. So far the crest and showpiece of functional integration - the Monetary Union - bears part of the responsibility for the persistence and aggravation of economic and social disparity in Europe due to the one-size-fits-all politics of monetary harmonization.
The latter ignores the weakness and structural disadvantages of the Mediterranean countries vis-à-vis the Northern economies characterized by high productivity and international competitiveness. Giving up the national currency by joining the Eurozone meant loosening the capacity to adjust to economic imbalances in the external trade relations by currency depreciation.
For Germany and other strongly export-oriented economies this turned out to be economically advantageous because of stable exchange rates as well as for price transparency. For the peripheral economies – such as Greece, Portugal or Spain – on the contrary this implies being unexpectedly entrapped in a system, which demands painful internal structural adjustments in order to maintain a minimum of competitiveness, thus reducing labour costs, cutting social security benefits, increasing income taxes, and rising dues.
Consequently, being part of the Monetary Union for the Southern countries means the surrender of their societies to the model of neo-liberal market economy. As members of the Monetary Union the peripheral countries continued to be in a structurally underprivileged position vis-à-vis the countries of the North. Therefore, a Matthew effect gained force at European scale, reproducing the historical patterns of social inequality and the corresponding social cleavages.
Moreover, the austerity program, which places heavy restrictions on the countries receiving financial aid from the TIFKAT (“The institutions formerly called Troika”) exacerbates the situation up to the point of social disintegration, political upheaval and anomie, especially in Greece. The Eurozone crisis turned into an austerity crisis, which undermines economic growth and political stability further.
Third, the cataclysmic crisis, which virtually disintegrates the basic fabric of peripheral societies, echoes the structural ambivalence and contradictions of the institutional setting underlying European integration. If European integration shall survive in the future a fundamental realignment of EU’s institutional orientation is required. Instead of the principles of market deregulation and monetary top down harmonization, which up till now dominate and at the same time distort the project of European unification, simultaneously generating non-intended perverse effects, another value has to gain momentum: European solidarity. After all, the integration project enshrines a social utopia: It aims at constructing a new type of European society based on enduring peace, transnational economic as well as political cooperation, social intercourse across national boundaries, and mutual support. The existing Structural and Cohesion Funds to some extent represent the logic of solidarity. Thus, the value of solidarity is already part and parcel of its institutional philosophy as well as its functioning. And therefore it seems to be the most important link for a fundamental revitalization of the European institutions.
So far, however, solidarity in the EU has been limited to specific sectors (mainly regional development), and simultaneously has been distorted by the logic of “juste retour”, whereby virtually all member states – especially the net-contributors - expect to receive as much of the money back as they transferred to the European level. This partly changed with the Euro crisis and with the financial support measures enacted by the EU and ECB.
Silently it transmuted in an inexperienced kind of solidarity instrument. This holds true as long as the ECB and other international lenders launched financial aids on the basis of extremely low interest rates and generously long repayment periods (up to 30 years). With this strategy the EU went already far in institutionalizing a new form of socialization of the costs of rescuing the Euro.
This strategy, however, is of an intriguing ambivalent nature: On the one side, it requires total self-subjection of whole societies under the hegemony of neo-liberalism, represented by the European North, especially by Germany. On the other hand, the socialization strategy fosters a false and counterproductive politicization of European issues. Especially as long as the EU is obscuring its nature of a de facto-transfer union, it will continue to strengthen anti-European populist parties and movements, in the creditors’ states as well as in the recipient countries.
Resentments against putatively idle people on the one side will be antagonised by counter-stigmatization blaming national arrogance and selfishness. What is needed to break this vicious circle is an open debate on the meaning of European solidarity and its range.
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