Reuters | Mon May 3, 2010 | 6:38pm IST
When Britain joined what was the European Economic Community, Prime Minister Edward Heath told diplomats from Australia, Canada and New Zealand over dinner that Europe would become a superpower and put the United States in the shade. The Canadian envoy was brave enough to challenge Heath but when his guests had left, the Conservative prime minister turned to an aide and said: "The poor old Canadian. He doesn’t get it, does he?" Heath’s words sound at best naive nearly four decades later. The unity of the European Union is being sorely tested by a debt crisis in Greece and the economic fragility of other countries.
It took the EU weeks to agree on a multi-billion euro aid package for Athens and it has still not managed to calm financial markets. Its ability to prevent contagion to other countries and hold the euro zone together is in question. Far from becoming a superpower, the 27-state group that grew out of the EEC is struggling to prevent itself sliding down the world rankings. Heath would have winced to hear the answer given by Diego Lopez Garrido, Spain’s secretary of state for European affairs, when he was asked last month about the EU’s failure to take decisions more quickly. "The European Union is not the United States. We are 27 states, not one state," he said.
WHERE DID EUROPE GO WRONG?
Heath’s reasoning for joining the bloc was that the only way Europe could have clout in a world of superpowers was if it could unite politically. The EU’s founders set their sights on ever closer political, economic and monetary union but the EU has often failed to speak with one voice, a flaw highlighted by recent crises. Germany has increasingly been made the scapegoat for holding out against emergency loans for Greece because its voters oppose bailing out a nation they regard as profligate and less hard working. Its image as a force for European solidarity has been tarnished.
But today’s European leaders do not have the same emotional commitment to political union as predecessors such as the former German and French leaders, Helmut Kohl and President Mitterrand. They survived World War Two, when their countries were enemies, and were united in the desire to prevent another war. "I remember Kohl saying to (ex-British Prime Minister) John Major, my former boss, that he and Mitterrand represented the last generation of leaders who would really see the case for European union," Sir Stephen Wall, a former British foreign policy adviser, said during a visit last month to Brussels. "He said there will be one more generation after us who will just about get it and after that, unless we take real steps now, we will have lost that impetus forever."
The fear of Moscow that united West Europeans during the Cold War ended with the collapse of the Soviet Union, even if some concerns have now been revived. Reunification firmly established Germany as Europe’s most powerful state. Granting membership to countries in east and central Europe made it even harder to take rapid decisions and widened the gap between rich and the relatively poor. Global economic crisis forced leaders to think about domestic problems more than ever and pan-European interests became secondary for voters. Even the success of the euro was put in doubt when Greece acknowledged its deficit was twice as high as previously reported and markets lost confidence in its ability to avoid a debt default.
On a more strategic level, the EU is accused of lacking visionary leaders and a "big idea" — a project all countries can rally behind. That ought to come from the European Commission’s Europe 2020 plan for stimulating growth and creating jobs but the plan has generated little enthusiasm. Critics see it as a rehash of a failed initiative to make Europe the world’s "most competitive and dynamic knowledge-based economy" by this year. At the heart of the Union, something is rotten. French President Nicolas Sarkozy and German Chancellor Angela Merkel have failed to click, and a lack of a common vision means the EU engine is at best stuttering.
NOT ALL GLOOM AND DOOM?
Gloomy predictions suggest the EU is in perpetual decline, one or two of the weaker member states will drop out of the 16-country euro zone, and economic growth will remain slow and unemployment high for years. Under this scenario, the EU would be increasingly marginalized, seen by emerging powers such as China and India as little more than a trading bloc and of ever less relevance to the United States. But the predictions are not all gloomy. The EU has often used crises to its advantage, forced by necessity to carry out tough reforms it would otherwise have avoided.
Under this scenario, the euro zone would hold together and reforms would force member states to be show more fiscal discipline and comply with targets set by the EU’s Stability and Growth Pact. Countries would implement labor market reforms, end the "economic imbalances" between member states and become more competitive. EU experts are erring on the gloomy side but say don’t write off the Union just yet. "I don’t have a crystal ball. We’re at a tipping point. We still have leverage and potential if we get our act together though I don’t see much of that," said Ulrike Guerot of the European Council on Foreign Relations think tank.