Hope in a new kind of union

The EU is ending because it is hopeless

By Francesco Sisci 

The European Union is at a dead end. This is not because the Germans, Italians, and French and the failing Spanish and Greeks are at loggerheads about how to improve their national accounts. The EU is ending because it is hopeless: there is no hope, no program, and no real plan to hold the union together or to demonstrate why countries with different traditions, laws, and senses of identity - countries that have been at war with one another for most of the past three centuries - should now merge and embrace the future together rather than repelling it. 

The cultural and political debate has not moved to the real question about the future of the continent and its people. It is stuck in petty bean-counting, constantly sustained by the lack of a thrust for common trust in the union. 

Certainly, here the southern countries didn’t live up to their part of the bargain when they signed on for the euro 20 years ago. For two decades, some, like Italy, made no real effort to improve their national accounts, and others, like Greece, went as far as falsifying their bills to suck more support from Berlin, via Brussels. Others again, like Spain, Ireland, or Portugal, were innocent enough to believe that a real estate binge was as real as the bricks they used to build their houses. 

These are certainly true and grave faults, issues whose solution has been delayed for almost a generation. However, there is also a flip side to this, which doesn’t excuse the guilty PIIGS but does put the current European difficulties into perspective. 

In the past two decades, Germany had a yearly trade surplus with other EU members varying from around 80 billion ($101 billion) to 120 billion euros a year. It was over half of its total yearly trade surplus, hovering at 200 billion euros, larger than that of infamous China, which has been branded a currency manipulator by some in the US press. Over a period of 20 years, with a simplistic calculation, this could make a tidy little sum: some 2 trillion euros in surplus (more than the total state debt of Italy) accumulated with other EU fellows and well over 4 trillion euros with the rest of the world. This money is certainly well deserved, and it is due to German ingenuity and hard work. It rightly financed the German reunification and bold industrial expansion into emerging global markets. 

But this was also possible because of the poor performance of other European countries. If Italy had paid off its state debts, if Spain or Greece had invested in real industries and not in cozy seafront villas or ill-deserved pensions, the German trade surplus could have been cut on both ends. Germany would not have exported that much to other EU members and exports from other EU countries, such as Italy, with a similar industrial structure, could have undercut German trade worldwide. 

This doesn’t mean that Germany misbehaved or did something wrong: you cannot fault the hardworking person for the sloth of the guy next door. And the sloth of the guy next door certainly should make the hardworking person think hard about going into business with that man or woman, as Germans are wondering now about holding a common currency with profligate Southerners. 

Yet this poses an important issue because that sloth at the very least created a market for the hardworking Germans and reduced competition, and also because Germany and the slob southern Europeans were bound to the same currency, money that fit the Germans (or that the Germans made fit themselves) and was both too tight and too slack for the others. In a way, the Germans could be faulted for manipulating (or not manipulating enough) the common currency to suit just their national needs, not those of other countries. 

It could be tricky and possibly unfair to argue along these lines against the Germans, but after all, for decades southern Italians have used similar arguments to fault northerners for their lack of development. 

One can easily see a trickle of anti-German sentiment resurfacing in Europe, and this could become a torrent if Germany were really to leave other Europeans to their destinies. The consequences of a torrent of these criticisms are unfathomable, but certainly not too favorable to Germany. 

Moreover, there would be the bigger economic question for Germany in the medium- and long-term future. Without an almost captive European market and with many competitors unleashed, what would become of German exports and the German economy? Unlike Southern cicadas, German ants like to think long-term, provided frantic short-term encumbrances and pressures do not cloud their vision. Besides, Germans may also need to cast out their fate of destroying Europe, one way or another, every few decades. 

This alone should suffice to move the present European debate and bickering from accounting rules to a different level. The real issue in fact is: We Europeans, North or South, should tighten our belts by changing our lifestyle and systems (south) or accepting we must foot the bill (north), but for what? Humans accept making sacrifices. Most are willing to strive for 20 years in school for the elusive hope of getting a nice job at the end of it, yet they need hope, a goal, or a project. What is the hope for Europeans? There is none, and without hope, without a project, there is no Europe. 

In 1989, West Germans and other Western Europeans accepted the German unification with East Germans not out of economic calculations, but because of a lofty goal: the union of Germany, something that was taken away from Germans for half a century. If only narrow political and economic calculations were put in place now, Germany would not be united, and East German Angela Merkel would not be chancellor. 

However, the German hope and lofty goal had been at work for centuries. Europe conversely is vague even as a geographical expression. 

A few years ago, Turkey was about to be admitted into the EU while Russia was shunned. Then European leaders were willing to forget the old history that put Muslim Turks against Christian Europeans (something that would have given preference to Christian Russians over the Turks) and to focus only on post-Ataturk, a-religious Turkey and on Russia, seen as a filial son of the communist USSR. Was it right, or was it wrong? 

Europe didn’t go through the complicated debate to choose conceptually between the two, as it touched nerves in every European country. Was, for instance, Europe to recognize religion as part of its tradition? Or should it toss it away, trying to build on other issues? This debate involves cultural identity, values, ideals, and the very sensitive issue of where to draw a line in the sand between Europe and not Europe. This has not started in the meantime, and it is so complicated that even if it started, it could easily unravel the weak cobweb of ties binding Finland to Portugal.

In fact, the success of the EU was in carefully skirting sensitive ideological issues and building on practicalities and common interests. Here, perhaps, there is the reason why Europe should be together. The real motive for a possible European unification lies in the enlargement of the world. Europe broke the world's regional boundaries when it started venturing on the seas and colonizing the rest of the globe. The process that brought the whole world together was boosted by the spread of universalistic ideologies of communism or the free market, and it was later bolstered by the fall of communism and the triumph of American-led globalization, traveling on the fastest bytes of the Internet and mobile phones. 

In this global world, single European countries are bound to count for less than a larger, united Europe. Only a larger Europe can confront now and in the future emerging giants like China, India, Indonesia, Brazil, South Africa, etc. This larger Europe would be convenient for everybody. Then Europe should try to link as closely as possible to Asia, home of most of those emerging giants. Germany knows it and has been investing much of its trade surpluses in Asia, and in China in particular, in recent decades. It can carry on doing it on its own, but it would be important to establish direct communication routes between Asia and Europe. These routes go through Russia or the Mediterranean from China, or if goods come from India and Southeast Asia, only through the Mediterranean. 

The ports in Turkey and Suez then become crucial, and so do southern European ports, such as Piraeus in Greece or Taranto in Italy. Land transportation to and from Asia in these ports could be faster and cheaper than from Northern European ports. Some Italian experts believe that land transportation from Taranto could be at least 15% cheaper than moving goods from any other harbor in Europe. These numbers could be sufficient to reorient Europe, building on faster and cheaper routes with Asia. 

This could be economic incentive enough to convince Germany to bite the bullet and shoulder part of the present pain while taking the political lead in forcing scallywag Italians on the path of economic reform and political union in Europe. Not only would a negative consequence be averted (dodging the split of southern Europeans, who would be made competitive by a cheaper currency, that would mean no drop in exports), but a positive element would also be added: faster and better links with emerging economies. 

Europe could be restarted from Taranto, and there is some indication that this could indeed be the case, as Rotterdam (the main north European harbor) has closed a cooperation deal with the Mediterranean port. 

Italian politics has been so far unable to focus on Taranto’s potential, but after all they have failed for 20 years to improve public accounts and have been dragging their feet in taking decisive actions even after the 2008 economic crisis exploded in their faces. In theory, a European effort could restart Europe from Taranto, a place with huge potential, where the largest Taiwanese (Evergreen) and Hong Kong (Hutchison Whampoa) companies have already invested and are full of hope. But the city is now teetering on the verge of doom because of an over-polluting steel factory, a symbol of the degraded state of the whole of Italy. It would new hope, a new plan, just like the European Union. But a plan for Taranto would be easier than one for the EU, and a plan could and should easily become a plan for Europe. 

Will this happen? The plan is there, now it is up to the Italian and European politicians and their own fuzzy calculations, if they see a way out of the bean counting. So for Europe, we dare say, it is either Taranto or death.