Despite pending referendum, UK is not European Union’s weakest link

April 1, 2016
A model presents a creation made with chocolate by designer Wang Jingzhi and Maitre Chocolatier Roberto Rinaldini during the international exhibition of chocolate "Salon du Chocolat" in Milan, Italy, February 12, 2016.  REUTERS/Stefano Rellandini

A model presents a creation made with chocolate by designer Wang Jingzhi and Maitre Chocolatier Roberto Rinaldini during the international exhibition of chocolate “Salon du Chocolat” in Milan, Italy, February 12, 2016. REUTERS/Stefano Rellandini

The drama of the European Union can’t yet be called a tragedy, but it’s shaping up that way. What started out as the salvation of a continent from the horrors of the first half of its 20th century is now — after decades of optimistic growth lofty proclamations — toiling miserably merely to exist. Dramatic tragedy is the collapse of high status and ambition: The EU grasped after greatness, achieved much – and is now perilously close to losing all.

The most obvious challenges from within come, first, from the always semi-detached British, who may well leave after a referendum in June. Informed opinion, which had been comfortably sure that fear or inertia would ensure continued membership, is now alarmed that threats of mass immigration, terrorism and increased economic turbulence mean out is winning over in.

But smaller nations are pesky too. Hungary is in what seems a frozen posture of enmity to the liberal ideals and practices of the Union it clamoured to join. To only a slightly lesser degree, so is Poland, seen since its 2004 accession to the Union as the most successful of the post-communist entrants. Greece still trembles on the brink of a new collapse: the governing leftist Syriza party must pass several dozen laws which will deepen austerity as a prelude to what is promised to be growth next year. It may balk.

Yet a still larger, and hidden, challenge comes from the state that was one of the founding six nations and has consistently been most enthusiastic for ever-closer union. That state is Italy, a world soft power for its art and culture, both historic and present, its flair in design, its cuisine, its beauty. Italy is perhaps the weakest point in the European construction — for obvious reasons, and a deeper one.

One of the obvious reasons is its public debt: at over $2 trillion, it is second only to Greece in these dismal stakes. Another is the weakness of the Italian banks, which are burdened with bad debt of some $350 billion. It can be managed, say the financial authorities, as long as growth continues to increase: at present, however, it’s slowing.

Prime Minister Matteo Renzi, a man of constant public optimism, seems to have passed on his upbeat view to the people of his nation, but not to the statistics. A Reuters analysis in January noted that Renzi’s sunniness “appears to have got through to most Italians, but this does not solve the chronically weak productivity and economic bottlenecks that have crimped its growth for two decades.” To set the seal on gloom, the analysis quotes the Deutsche Bank economist Marco Stringa as saying that “Every year (Italy) grows below the euro zone average, and if you are always below the average you have a problem.”

But here’s the deeper problem, pointed up in a recent study by the Italian scholar Manlio Graziano. His “The Failure of Italian Nationhood” has been greeted as “one of the…most serious attempts to grapple with the country’s first 150 years.” Graziano – to cut his intricate analysis to the bone – believes that the heterogeneous nation-states of the peninsula, which showed such world-beating creativity in every field through mediaeval and Renaissance times, were then subject to stronger powers, taking advantage of disunity, dominating large parts of the peninsula.

Unity was, and still is, promoted as overthrowing the foreign domination. But its effect was a country internally divided, a south sullen in the face of northern imperialism, a politics that could only work through endless compromises and increasing corruption. When other states, often with much internal strife, reorganized to adapt to global changes, Italy devalued. When its membership of the euro made that impossible, Silvio Berlusconi, when prime minister, kept the show on the road through subsidies with the aid of a tax rate that was one of the highest in Europe.

Renzi, trying to push the Italian boulder up the Seven Hills of Rome, has this as a legacy, using the EU both as a punch bag when it opposes him (as over bank bailouts), and as what Graziano calls “a bogeyman at the gates,” forcing necessary change.

The deeper danger to the EU lies here. The obvious problems are great enough, demanding both boldness, which Renzi has, and skill, which he may not. The larger changes are not only those of forcing a self-absorbed political class to face up to its responsibilities, but to confront a population with the need for systemic and personal change, both profound and long lasting.

It’s quite possible that the country can’t produce a political party, or class, capable of achieving this transformation. The party now growing in power is the Five Star movement of the comedian Beppe Grillo, which started a mere seven years ago as an internet-based protest wave. It now seems to be evolving into a populist-cum anti-corruption force, deeply skeptical of the euro – which Grillo has called “an anti-democratic straitjacket” – and even the EU itself. Its chances of winning are promising; those of becoming the necessary force for deep system change, slim.

The solution implicitly favored by many politicians, and explicitly by the intelligentsia, has been that what is beyond Rome’s competence can be achieved in Brussels: Italy’s official posture of eager Europeanism is a reflection of that. But anyone who expects Brussels to achieve anything of the scale required has not attended to the events of the last two years. The commentator Wolfgang Munchau, a strong EU supporter, has excoriated the EU’s futile “muddling through” crises, and concluded that it has “destroyed public confidence in the EU and in the very idea of European integration.”

Italy faces mountains too large to climb: a resurgent political movement which wants rid of the euro (the better, probably, to return to devaluation); and time running out for a prime minister in a hurry, without sufficient allies. Ever-closer union could only work where the states uniting were capable of providing both a national, and a supranational political class to accomplish vastly ambitious goals. Where neither exists, these goals dissolve.

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The article begins citing war as the primary motivation for the founding of the EU, but fails to mention the inability of the EU to prevent war. Until 1991, the US guaranteed the peace in Europe, not the EU. Since then, Kosovo, Georgia, the Crimea– these conflicts were “pretended away” by imagining that they aren’t really in Europe. Putin has discovered that neither the EU nor the US will counter him effectively (the US/NATO are now stationing 3 brigades in the East but their rules of engagement are weak). He continues his drive to restore the prior Soviet Union map coordinates in the East. And the contradictions of inviting Turkey to join the EU are too numerous to mention here.

Besides “peace,” a 2nd foundational reason was “prosperity.” There too the EU has stumbled. The notion that Germany and the Netherlands can set monetary policy for Greece and Italy is nonsensical. There are really 4 groupings, with unique fiscal, trade, industrial, and monetary requirements. It’s become impossible to paper over these contractions any longer. The differences seen in the Eastern members are provoking comment and hand-wringing elsewhere, but the same is true across all the groupings (witness the South group’s animosity toward the Germany/Austria group, or the trade frictions between the Northern group and the East.)

Resolving internal contradictions that are structural and foundational won’t be done by the “boldness” of political parties. The EU should retrench and identify a fallback position that is way short of “integration” but still yields the lion’s share of economic and social benefits.

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