May 21, 2012
Posted by Vaira Paegle
On May 9, 2012, the European Union celebrated
its 62nd anniversary, albeit under the shadow
of the Euro zone debt crisis and election
results in France, Greece and Germany. The
European Union remains the largest economy in
the world (IMF-2011), but it is steadily losing
its economic superpower status and influence,
and it is the future of project "European
Union", not whether France or Greece will turn
from austerity to increased public expenditures
that should concern us.
The European
Union has overcome many past challenges, but we
have only to look to the Lisbon Treaty of 2009
to understand the origins of the latest crisis.
The Lisbon Treaty, which was to transform the
EU into a more democratic, effective and
accountable entity, was ratified in 2009 after
more than five years of hard negotiations on
procedural matters. Engaged in political and
institutional disagreements, EU leaders
diverted their attention from pressing economic
and budgetary problems, and forgot the guiding
principles embedded in the 1957 Rome Treaty –
to secure economic and social development of
member states, improve the quality of life and
working conditions of EU citizens, and
coordinate economic activities. Economic Europe
was sacrificed on political Europe's altar. The
jinn of economic nationalism and fiscal
irresponsibility was released from the bottle.
The financial disaster in Greece is a
perfect example of this, where national
self-interest, coupled with runaway public
spending and political populism, threaten to
destabilize the EU at its core. Rather
than complaining and blaming Brussels for their
troubles, the Greek leadership should look to
Latvia's example as a way out of the
crisis.
Latvia had the distinction of
being the first EU member state to experience
financial collapse and the first, under the
competent leadership of Prime Minister
Dombrovkis, to recover, resisting the siren
call of protectionism. Latvia's government,
bravely taking responsibility for the
catastrophic economic policies of its
predecessors, recognized that its market was so
small that it would have collapsed long ago,
had it not been for EU membership. As part of
“new" Europe, Latvia had not acquired the
arrogance of “old" Europe member states, which
continued to finance unsustainable public
spending, believing there would be no
consequences. The Latvian taxpayers took to
austerity without complaint, mainly because
they had less to lose than the Greek taxpayers,
who have become incurably addicted to generous
social benefits they cannot
afford.
Obedience to EU and IMF rules of
fiscal discipline has had its rewards – Latvia
is showing spectacular first quarter growth in
2012 of 6.8%, proving, to quote the Financial
Times, that there is life after
austerity. Besides serious budget
consolidation, Latvia strategically utilized EU
Structural and Cohesion funds, worth billions
of Euros, for social programs, research and
development grants and investments in
infrastructure projects to compensate budget
cuts and encourage growth.
The EU
has acknowledged that member states cannot be
allowed to ignore long term economic strategic
planning and must submit to single market
requirements consistently, not when it is
politically expedient to do so. Good economic
governance is now on the EU agenda, French and
Greek elections notwithstanding.
Driven
by great personalities and innovative ideas,
the European Union was born out of Europe's
economic wars. Europeans understood that peace
and prosperity in Europe was possible only by
destroying the enemy- their own nationalism,
competitiveness and territorial
ambitions. Today, Europe once again has
become a united and consolidated EU's most
serious enemy. To overcome this latest
challenge, the Europe Union needs new,
visionary leaders who can reinvigorate its
reason for existence. French President Hollande
has promised to take “Europe in a new
direction" but has yet to specify how he plans
to do that. I believe Northern Europe has
shown itself most committed to the founding
principles of EU, and Sweden's Carl Bildt,
Estonia's Thomas Ilvess, Latvia's Valdis
Dombrovkis or Poland's Donald Tusk are all
capable of assuming the leadership necessary to
bring more European Union and less Europe
to the European continent.
European
Union solidarity and power are vital to the US
national interest. Sharing common democratic
values, the EU-USA partnership is not only a
matter of national security. The EU - not its
component parts, not Canada, China or Mexico –
is also USA's largest trading partner. A
healthy US economy is inconceivable without an
economically strong EU.
The European
Union is a legal personality empowered by
treaties to conduct a common foreign, economic
and security policy. While bilateral relations
are important, the US Government would do well
to tip the balance of relations with EU member
states in favor of a more visible and active
relationship with EU leaders in Brussels, thus
adding credibility and support to their efforts
to reestablish trust in the EU as a cohesive
and powerful economic block.
The views expressed in this blog are those of the authors and do not necessarily represent the views of the Center for National Policy.
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