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Jewish World Review July 10, 2012/ 20 Tamuz, 5772 Make the Euro A Joking Matter By Paul Johnson
During the past two years EU leaders have held numerous summit meetings, including tête-a-tête encounters between Germany’s chancellor, Angela Merkel, and France’s former president, Nicolas Sarkozy. All were hailed as make-or-break opportunities to “save” the euro. All failed. Meanwhile, most of Europe is sinking deeper into stagnation or industrial decline and experiencing rising unemployment and psychological despair. The EU’s failure is affecting the rest of the world. China’s exports are suffering and its economy faltering because of the drop in demand from the EU, its biggest single market. The U.S., which has been enjoying a natural recovery, is feeling a knock-on effect from EU weakness. Britain is also complaining. There are two chief reasons for the euro zone mess. A strategic error was made in creating the euro as a common currency without aligning its members’ financial and fiscal policies. Without a submergence of sovereignty some members, especially the weaker and more extravagant ones to the south, were bound to exploit their membership through reckless borrowing. Greece, Portugal and Ireland were flagrant and obvious examples. Spain recently emerged as an even more extravagant case. And under its socialist ideologue president, François Hollande, France will soon be joining Spain. The only remedy for this folly is strong leadership by those in charge of the EU. In practice, this means Germany. But Chancellor Merkel has been brought up to believe that the two world wars were essentially “German wars,” caused by Germany’s attempt to boss Europe around. So leadership is the one thing Germany can’t afford to exercise. The stronger it is in relation to the rest of the euro zone, the more Merkel must refrain from telling the others what to do—a self-induced moral paralysis. Hence, whatever now happens on the European continent will not be planned. The likelihood is that the euro zone’s weaker members will be forced out one by one. This ragged and unpredictable process will be accompanied by market shocks, bank failures and rising unemployment in all countries. This is a formula for economic disaster, to be followed by the rise of political extremism, especially on the right. With Germany—Europe’s strongest economy—flatly refusing to lead there’s not much hope that Britain, strangled by a coalition, will satisfy the deficiency. In order to stay in office David Cameron has to keep his Liberal Democrat allies content, and they are fanatical “Europeans,” who refuse to see that the EU cannot work because it is too bureaucratic and doctrinaire. As long as America continues to have a weak and indecisive Administration, we can expect no resolute lead from Washington, either. Mitt Romney has yet to establish himself as a world figure, but he has an opportunity this summer and autumn to make the recovering U.S. economy—by far the world’s largest—pull its weight again. The U.S. has the wonderful ability to speedily transform itself from a state of intense pessimism to one of vigorous optimism. I remember the dark days of the 1970s, when the enforced resignation of Richard Nixon and the stagnant years of Gerald Ford’s and Jimmy Carter’s presidencies combined to drive America’s admirers to near despair. But then came the advent of Ronald Reagan. Within weeks of Reagan’s entering the White House America’s pulse was racing, there was a new sense of purpose and the Administration began acquiring the decisiveness and authority that became its hallmarks. The recovery of America’s characteristic self-confidence was a political miracle. If Mitt Romney is elected the same thing could again happen. And it needs to happen for the world economy to get back on track to expansion. Then old Mother Merkel can tag happily along in Romney’s wake, and the fate of the euro will descend to its natural level: an expensive joke.
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Eminent British historian and author Paul Johnson's latest book is "American Presidents Eminent Lives Boxed Set: George Washington, Thomas Jefferson, Ulysses S. Grant". Comment by clicking here.
© 2009, Paul Johnson |
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