|
The leaders of Europe have been
criticized for their inability to deal expeditiously with the Eurozone debt
crisis. Many view the paralysis through the prism of self
interest: taxpayers of the EU's creditor nations are simply unwilling
to finance spending of the bloc's debtors. But the hesitancy can also be
ascribed to the growing voter dissatisfaction with the entire structure of
the Eurozone, and in particular a chasm between German voters and German
leaders.
Following the devastation of two world
wars, the European Union was conceived as a super state that would prevent
traditional nationalistic tensions from destabilizing the Continent. German
and French cooperation was at the heart of negotiations and was the primary
factor that led to the establishment of the Union. But the two countries had
somewhat different goals.
Germany, knowing that its future lay
with its proven economic prowess wanted to ensure captive markets. France,
overtaken twice by a belligerent Germany in the previous century, sought
permanent peace. Knowing that voter aversion ran deep, French and German
leaders determined to build and expand the EU by stealth if necessary.
Indeed, Frenchman Jean Monnet, one of
the architects of the EU reportedly said "Europe's nations should be
guided towards the super state without their people understanding what is
happening. This can be accomplished by successive steps, each disguised as
having an economic purpose, but which will inevitably and irreversibly lead
to political union."
Initially, the loss of sovereignty was
acceptable to the southern democracies struggling with uncertain economies,
Portugal, Italy, Greece and Spain (later to become known as the PIGS), which
benefited from massive EU funding. In the main contributing nations, notably
Germany and Great Britain, voters showed greater hesitancy. In France,
Denmark and Ireland, which initially voted against political union in
referenda, means were found to ignore voters' wishes. To overcome northern
objections, the union was touted as a free trade area that would benefit
productive economies.
Over decades, periods of economic stress
always provided proponents of greater centralization with a means to advance
their agenda. Greater union was the cure all for economic ills. The
establishment of the common currency in the late 1990's was seen as the
lynchpin in making the Union permanent.
But the euro itself was fatally flawed
from the start. Despite the lack of fiscal unity needed to underpin a single
currency, European leaders took the plunge and trusted that all would work
out in the end. Their gamble is now proving costly.
Today, with pro-union hierarchies in
firm control of the political class in France and Germany, and with career
politicians susceptible to party coercion, national parliaments are becoming
less and less representative of popular will. In any event these national
bodies have already ceded some sovereignty to the EU, with some 70 percent of
legislation estimated to come from non-elected officials in Brussels. But the
European Parliament itself is virtually powerless in setting policy. The net
result is unaccountable government. The Federal Constitutional Court of
Germany cited this "democratic deficiency" two years ago.
The hardships of the current recession
and debt crisis have fanned voter apprehension. There can be no doubt that
street level discomfort with the super state is growing in Berlin, London,
Paris, and Rotterdam. Conscious of these issues, northern tier Euro zone
politicians are now loathe to antagonize voters
already frustrated with the political status quo.
However, Germany's political elite may
be seeing the crisis as a singular opportunity to gain greater control of the
countries that are on the receiving end of its bailout funds. Currently,
Germany's formal executive power throughout the EU is far lower than its
bailout contributions would suggest. Berlin is actively looking to change
this. If they are successful we may look back on the establishment of the
euro as the means by which Germany finally acquired the empire sought by
Bismarck. German voters, not sharing these dreams, may be less willing to pay
the price with their hard earned savings. As a result, German leadership is
currently rudderless. Bereft of direction from its most important member, the
EU itself drifts.
But let there be no uncertainty on one
point: Either Germany gains control of the crisis and creates a German led
super state, or the experiment with European integration very well may have
run its course.
John
Browne
Euro Pacific Capital, Inc.
John Browne is a former member of the UK
Parliament and a current senior market strategist for Euro Pacific Capital. Click here to learn more about Euro
Pacific's gold & silver investment options.
For a great primer
on economics, be sure to pick up a copy of Peter Schiff's hit economic
parable, How an Economy Grows and Why It Crashes
|
