It's More Than a Political Crisis, It's an Existential One

It's hard not to think all the time about the crisis that Europe is wading into ever more deeply. Reading the papers these days really reminds of the stories from the early years of the Great Depression: lots of trouble, availability of certain effective responses, but inability of leaders to implement them, individually or collectively, and often even measures that exacerbate the problems. I'm not an expert on international finance or economics, but there are many people writing who are, and if you try to interpret what they're really saying, the picture is grim. Greece won't be able to pay its debts (ever) or even meet Europe's requirements for the next transfer of aid money, but European leaders can't recognize this, even though to some observers (for example my trusty Economist) it's been clear for close to two years. The consequences of a restructuring of the Greek debt would hurt, especially in better-off European countries, like France and Germany, but it would hurt far less than continued uncertainty--uncertainty about what will happen to Greece (stay within the Euro, or not? go bankrupt, and if so, in what way?), but uncertainty especially about whether "Europe" is capable of addressing its most fundamental problems in an effective way. This particular kind of uncertainty also makes it more likely that other European countries become more vulnerable to falling market confidence. Some, we've all seen their names mentioned regularly, do have structural weaknesses in their economies and large budget deficits, but the biggest problem seems to be lack of confidence in "Europe's" ability to contain the real crisis to the weakest link--Greece--and protect the others.

The past day or two, we hear a lot more talk of a likely Greek debt restructuring, but this doesn't mean that the Euro zone's political leaders have accepted its inevitability, let alone their respective public opinions. So we still need to get leaders, Merkel, Sarkozy, to accept the inevitable. Once we get there, however, the next step is reaching a concrete European agreement on this new course, which for its part will then have to be cleared by the many national parliaments. (And as of today, September 23, we're still waiting for the ratification of Europe's last major plan for Greece and the Euro zone, dating back to July 21. You read that right: it's crisis time, but Europe takes more than two months to ratify essential and urgent plans to deal with the situation. Democracy is messy, but this looks more like self-mutulation).

Time is of the essence here, and the way "Europe" operates therefore virtually assures failure. "Europe" has always operated this way through its half-century of integration: very incrementally, often acrimoniously, certainly not always logically, let alone efficiently. (In hindsight, it really wasn't such a good idea to launch a common currency before having the concomitant common fiscal and economic policies in place). According to Angela Merkel recently (probably the one person who could, if she wanted to take the political risk, enforce a different modus operandi) it's still the way things get done, and her implication was that we'll just have to accept this. The scary thing is: she may be right: "Europe" as it exists right now--its institutions, its political leadership, its peoples--really may not be able to act swiftly and decisively, not even when the future of its currency, its standard of living, perhaps its many accomplishments since the 1950s are at stake. Measures that on the merits would make the most sense are politically unreachable, and so leaders don't want to go there, or they go there so slowly as to make the whole process virtually irrelevant.

And so too little gets done too late. That's irritating, but not lethal, in good times. In a dangerous financial situation such as ours today, it may well lead, not just to a new major global financial and economic downturn, it could also end "Europe" as we know it. Of course, if "Europe" can't, won't reach for available, constructive measures to save itself, by definition it cannot be saved, doesn't deserve to be. We'll be sorry in a few years, because for all of "Europe's" significant flaws, life without it is likely to be more chaotic and less prosperous, for Europeans, but also others. It's not that long ago that, in an disorderly post-Cold War or post 9/11 world, we thought that at least Europe had figured out how to work together on an ever-growing number of subjects--a model for other regions, really. Boy, were we all wrong.