Economy Shows Cracks in European Union

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Onze politici zijn dus niet de enige die pleiten voor o.a. vakantie in
eigen land ;)

Zou een grondwet hier helpen, of juist de grotere landen de macht en
positie geven om 'door te duwen?'

Groet / Cees

http://www.nytimes.com/2009/06/09/world/europe/09union.html
June 9, 2009
Continental Divide
Economy Shows Cracks in European Union
By STEVEN ERLANGER

BERLIN — The European Union is an extraordinary experiment in shared
sovereignty, creating a zone of peace that now stretches from Britain to
the Balkans. The union of 27 countries is the world’s most formidable
economic bloc, incorporating 491 million people in an integrated market
that produces nearly a third more than the United States.

But the global economic crisis has made it clear that Europe remains less
than the sum of its parts.

The crisis has presented the European Union with its greatest challenge,
but even many committed Europeanists believe that the alliance is failing
the test. European leaders, their focus on domestic politics, disagree
sharply about what to do to combat the slump. They have feuded over how
much to stimulate the economy. They argue about whether the European
Central Bank should worry more about the deep recession or future
inflation. And they have rushed to protect jobs in their home markets at
the expense of those in other member countries.

The latest European parliamentary elections on Sunday drove home the
point. Only 43 percent of Europeans voted — a record low turnout, despite
the financial crisis and compulsory voting in some countries. Far-right
parties, opposed to the European Union and to immigrants from poor member
countries, recorded gains, as did the Greens. Those who did vote weighed
in largely on national issues.

With American leadership undercut by divisive foreign wars and the United
States’ economic model of market freedom and light regulation under great
challenge, Europe matters. The “European model” of significant government
involvement in the economy; close supervision of finance, industry and
labor; and generous state-run pensions and health care, is being praised
in some circles as a freshly viable alternative to Anglo-American-style
capitalism.

But although the subprime mortgage crisis began in the United States,
Europe is arguably suffering more. The International Monetary Fund
estimates that European banks hold more bad assets than American ones and
have written down much less. Budget deficits are rising, and unemployment,
especially among the young, is already at its highest in 10 years.

With the response hobbled by a fractious European Union, many economists
now expect the downturn to last longer here than across the Atlantic.

“We are in a moment of a very severe crisis,” said Joschka Fischer, a
Green Party politician and former German foreign minister. “We have a
traumatic lack of leadership; we are caught right in the middle by the
flood.”

National vs. Common Good

The central tension in the union has always been between national
priorities and collective interests. Ceding national rights and powers —
over currency, trade, customs duties — has never been simple, even in good
times. In bad times, like the current downturn, national politics trump
the common interest. Leaders move to protect their own industries, workers
and voters at the expense of those elsewhere. Workers still seethe at the
sacrifices they feel they make on behalf of integration.

At the Goodyear Dunlop tire factory in Amiens, in northern France, Thierry
Fagot, 36, is losing the job he has held for 13 years. He sees competition
within the alliance as part of the reason.

“I feel like I was fooled. I mean, we created Europe to protect us, and
for a long time it worked,” he said, explaining that Europe provided a
market for the factory’s tires and established safety rules. “Now, with
the competition of Eastern countries, I feel like Europe created this
situation where we’re losing our jobs to another E.U. country. How can
this be for the greater good?”

The European Union is not about to collapse amid such antagonisms. But
some of the continent’s most devoted advocates are scaling down their
ambitions. Few speak any longer of a Europe that is a significant
political or military counterweight to the United States.

Mr. Fischer, the Green Party politician, is a committed European who
bemoans “the post-’89 generation’s” indifference to the ideals of a
European destiny, and the retreat, under the pressure of the crisis, to
nationalist goals and rhetoric.

“Crises are always moments of truth because they relentlessly expose both
the strengths and weaknesses of all the players involved,” said Mr.
Fischer, criticizing in particular the narrow, national vision of the
German government.

He said the European Central Bank, which sets a major borrowing rate for
the 16 nations that use the euro as a common currency, has done well. But
the European Commission, the union’s main executive body, “played a zero
role in the present crisis, and this was a transnational crisis, so the
role of the commission should have been just the opposite.”

Instead, European leaders are concentrating on passing the long-delayed
Lisbon Treaty, to create a European president and foreign minister and
simplify decision-making. But the treaty has little to say about economic
matters.

The strains are evident in the way countries have worked to bail out their
own banks and rescue national factories of global automobile companies,
when a broader European policy would be more logical. But they are also
visible in the inability to agree on a policy toward Afghanistan or on a
joint energy policy to reduce European dependence on Russian natural gas.

German-French Tensions

Germany and France together are the traditional motor of the European
Union, but relations between them are cold, with the French president,
Nicolas Sarkozy, and the German chancellor, Angela Merkel, putting
national interests first, whether the issue is social benefits or saving
jobs in the faltering car industry.

Divisions are also evident between northern Europe and southern Europe,
with more fiscally responsible countries like Germany only reluctantly
promising to help floundering economies like those of Spain and Greece.
Solidarity, meant to be the great principle of the European Union, is
fraying as well on East-West lines, with the countries that use the euro
reluctant to jeopardize the currency’s stability by rescuing members
outside the so-called eurozone, like Bulgaria and Romania.

Few want to consider what happens to Ukraine, a nonmember, where many
European banks, especially German and Austrian ones, are heavily invested.

And the promise of a Europe “without borders” has been undermined by a
reaction in hard times against immigrants from around the region who are
seen as competing for jobs.

Before the European parliamentary elections, Mr. Sarkozy and Ms. Merkel
issued a joint letter. “We want a strong Europe that protects us, we
reject a bureaucratic Europe that mechanically applies nitpicking rules,”
they wrote.

But they disagree sharply on the role of public spending and the European
Central Bank. Mr. Sarkozy favors more stimulus and giving the central bank
the flexibility to buy bonds or public sector loans to help revive
lending. Ms. Merkel, in contrast, has attacked rising budget deficits and
criticized the central bank for reducing interest rates too much and
risking future inflation.

They agree, however, on protecting jobs in their home markets. While Mr.
Sarkozy has been criticized for providing billions to protect French car
companies, Ms. Merkel, with a national election in September, has just
brokered an expensive deal for Opel, the European branch of General
Motors, almost entirely based on saving German jobs.

The former French president Valéry Giscard d’Estaing said that since the
French rejected a European constitution he helped to draft in 2005,
national leaders had dominated those who favor a stronger union.

“It’s retrograde,” he said in an interview. “In a short-term crisis, you
may have national intervention to protect people, but it’s not a policy,
it’s just a reaction,” he said, putting the single market at risk. “The
trend must be to see the European market as a whole.”

Questioning a Bloc’s Purpose

In Calais, France, the Schaeffler Chain Drive Systems factory,
German-owned, makes parts for Opel. A third of the workers were laid off a
month ago, including Dany Valcke, 53. He was a foreman, but now, as he
says, “time is all I’ve got,” and he doubts he will ever find another
factory job.

“Europe is a good thing, it allows our countries to have a stronger voice
in the world, and it brought peace,” Mr. Valcke said. “But economically,
it’s not so good. Many have lost their jobs to European countries where
the work force is cheaper. They are part of Europe, but if you want
Europe, you can’t have these two competing systems.”

The European Union “didn’t try hard enough to help its people through the
crisis. It probably doesn’t even have the power for this,” he said. Then
he asked, a bit plaintively: “Sometimes I wonder what it’s for, if not for
this? I find the U.S. government response to the crisis much more
appropriate.”

In Romania, on the other side of the union, the workers are suffering,
too. But they take some comfort in being part of a larger, richer bloc
than their old, Soviet one, and in general blame local leaders for their
problems.

Cristina Lincu, 32, went to find work in Spain in 2001. Now she is back
home, with her husband and baby son. The crisis hit their small Madrid
grocery hard, but it also reduced property prices in Romania, so they came
back and bought land for a house. In a way, she gained from the crisis,
Ms. Lincu said, but she is concerned about her fellow Romanians in Spain.
There, “the vast majority of immigrant workers were doing low-paid or not
very dignified jobs, but now even Spaniards want those jobs,” she said.

As for the European Union, she is grateful. “It’s a wonder they admitted
us in the first place,” she said, laughing. “We have such a big corruption
problem here.”

As for the future, opinions are divided, but few predict that the European
experiment is over. The Lisbon Treaty is expected to pass eventually,
strengthening the union’s powers. And today’s leaders, however divided,
may learn to grapple with economic challenges collectively, even as they
learned to avoid the military conflicts of an earlier age.

“It will be tough, we’ll have setbacks, history will beat us up, we’ll
have painful years, but I think crisis creates leaders, the right
leaders,” said Mr. Fischer, the German Green Party politician. “I’m not
pessimistic.”

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