Who will save the European Union from Europe?
May 21, 2012Posted 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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