Can Europe Make It?

A rationale for Europe: start with the south

The European Union's interlocking crises have had an especially severe impact on its southern states, from Spain and Portugal to Greece and Italy. A perspective from there can also be the springboard to Europe's recovery, say Francesc Badia i Dalmases & Oleguer Sarsanedas.

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Oleguer Sarsanedas Francesc Badia i Dalmases
16 May 2014

A series of interlocking crises is putting Europe’s common integration project, now and in the future, at risk. As a result, the European Union finds itself in deep existential trouble at the very time when - against a background of growing uncertainty, a rapidly changing environment, and an increasingly unstable neighborhood - coherence and momentum are most needed.

This dilemma has been felt with particular intensity in the four major southern European member-states: Spain, Portugal, Italy and Greece. These countries may be heterogeneous socially and economically, but they have vital experiences in common. The way in which these member-states emerge from current crises and find their way to recovery will determine the future of the EU as a whole - and as the integrative, balanced and democratic joint project it is meant to be.

The widening gaps

The financial and economic convulsions of the Eurozone have revealed how flawed was Europe's monetary-union design. When they erupted in 2008-09, deflation seemed the only available policy response, creating a burden of adjustment that fell very unevenly: mainly on salaried workers and the indebted middle classes in the deficit countries, while the surplus countries were let off the hook. The poor management of the euro crisis thus created an ever widening north-south gap within the union, but also to an erosion of democratic legitimacy - again, particularly in its southern periphery.

The politics of austerity has had a damaging impact across Europe: polarising Europe between creditors and debtors, pushing its southern economies into a double-dip depression, and imposing high costs on citizens (poverty, inequality, and huge unemployment rates) in ways that jeopardise an already weakened social compact. The politics of recovery, as and when it comes, must avoid reinforcing these imbalances.

The divisions within Europe have been more than material. There has also been a widening gap in mutual understanding, as biased perceptions and prejudices among and within European nations have spread. The price includes mounting disaffection among the public regarding Europe's integration project, which has dragged popular support for it to a historical low. Along the way, fundamental bonds of trust - a vital ingredient in holding societies together - have been eroded.

These gaps within Europe - between the EU's north and south, between core and periphery - need to be countered for integration and consolidation to have a future. Undeniably, the structural imbalances and weaknesses of the southern economies must be addressed, and this demands hard work and sacrifice. But the disregard for the social plight of millions is plainly dangerous. The pursuit of tight fiscal policies to deal with excess deficit and debt, entailing tight control of national budgets, has largely underestimated - even ignored - these policies' local costs (economic, social and political). This is particularly true in the case of Spain.

Spain's modern society retains many impressive features, such as tolerance, resilience, non-discrimination, and an overall aversion to violence. But these have to a degree also masked the damage done by flawed policies during the last three decades, when internal financial transfers were used to paste over the country's regional-territorial tensions. When the onset of financial crisis cut the money-flow, these tensions resurfaced with a vengeance.

Spain's situation in this regard is not dissimilar to that of the EU as a whole. For the union is currently besieged both by centrifugal tensions between (and within) member-states, and by a growing concern about the rise of nationalism, populism, fascism, Euroscepticism (and outright Europhobia) across the continent. The "re-nationalisation" of European politics has produced a corrosion of Europe’s common values. This could, if unchecked, have the effect of pushing the union further into internal confrontation, even potentially towards disintegration.

The recovery path

The failure of the European Union as a political project is now a possibility. In response, the EU’s long-standing debate over its identity-crisis has to go beyond the customary discussion about "widening" or "deepening", for this lacks the required degree of foresight and is clearly unable at present actively to engage the European citizenry.

Europe has lost the hearts and minds of its citizens. A more balanced, inclusive, accountable, and democratic Europe would likely be the answer. To move in that direction, southern European policymakers and thinkers have a decisive role to play, both in shaping the overall agenda and convincing their northern peers to work with them to produce a vision for Europe that inspires people with optimism and hope. It is the periphery member-states that must persuade the core to take an active stance in restoring to the European integration project its status as a positive-sum game: both by sharing the costs of exit from the crisis, and by catering responsibly to the needs of those on the losing side of the equation, most of whom are trapped in the south.

If Europe is to emerge stronger from this critical, make-or-break moment, a renewed common vision has to be built. In turn this must become the foundation of major decisions made in the common interest. The challenge European nations face today is to move beyond continuously asserting their independence and instead make a virtue of their interdependence.

Europe must obviously devise the right policies to overcome its current troubles. But it must do more: reinforce its fundamental democratic values of solidarity and tolerance, under two key, related headings: equality and diversity. It needs to restore trust between its core and its periphery, between debtors and creditors, binding up the wounds inflicted by the policies brought by the most disruptive crisis in the European Union’s history.

Southern European member-states must remain vigilant, for it is urgent that an economic recovery begins to narrow rather than widen further the existing gaps in social cohesion and solidarity. A willingness of all Europeanists, north and south, to commit to this task would be a vital first step in the recovery of Europe.

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