New fiscal compact does not solve European Union’s existential crisis

Is this it? Have the Euro and the European Union been saved? In all the media noise about the splendid isolation of Britain, one might forget that the EU is facing not one but several crises and that the “fiscal compact “summit might well have postponed or even killed the more essential debate on its political future. This could have been the crisis which the EU should never have wasted.

As a convinced European (not necessarily a European federalist), I believe what was achieved during last week’s summit will help in no way to revive the European project. Yes we might have more fiscal integration (to do what? Impose more socially unfair austerity?), but EU-lovers who believe a new step towards political integration has been taken are seriously mistaken.

Let’s have a look at what the “fiscal compact” will not solve.

It does not solve Europe’s “sovereign debt” crisis. It will do little to convince the markets that politics is on top again. The financial cowboys will in no time start further speculative raids against the weakest links in the Eurozone. These attacks could become even heavier as it has become clear from the pre-negotiations on this deal that our leaders have no intention of taking the real culprits of the crisis to account. There is still no intention let alone a blueprint for a fundamental reform of the unhealthy (perverse?) relationship between the financial elites and the political elites. The ideology of the neo-liberal free-market dominance still reigns supreme.

It does not solve Europe’s “democratic deficit” crisis. Citizens in Europe have lost trust in European leaders and the EU institutions. For all the energy spent in the last 10 years of bringing Europe closer to its citizens, the gap has opened up considerably increasing fears for populists and new dangerous nationalist movements. The problem is not so much failing communication (the usual “culprit” in EU circles) as failing policy delivery. Citizens have the impression that in the last 15-20 years the EU has failed to represent their interests and protect their prosperity. The fact that national governments are constantly using the EU (and especially the Commission) as an easy scapegoat does not take away from the reality that the EU that was built on the Europe1992 vision with its priorities of internal market, liberalisation, deregulation and globalisation has not delivered for the common man.

What Europe needs is not a “big bazooka” (the fact that EU leaders are now using military metaphors is amazing) but a “big debate” on its future in a world of global geo-political power shifts and increasing resource constraints. What Europe do we need to defend our European model of solidarity and prosperity in times of the “Long Descent”? This urgently needed debate should not be about small institutional changes but should be a thoughtful and effective dialogue with society (not just with the European “chattering classes”) for a radically different vision for Europe by 2030 (a “Social Compact”). The question whether our current EU institutions need to be reformed, modified, abolished or rebuilt starts only after having defined this new vision.

It does not solve Europe’s “ecological debt” crisis.

It is now a well-accepted truth that we have been living above our means, not only financially but also ecologically. The strong metaphor of the ecological footprint has made policy makers and citizens aware that business as usual is not an option as we would need at least 2 to 3 planets to give all 7 billion Earth citizens the same lifestyles as the one we do not want to have questioned in our developed societies. This insight plus the climate crisis, the growing awareness of new energy constraints (“the end of cheap oil”) and the “paradigm shift” in commodity prices has put the sustainability crisis on the political agenda and re-opened the debate on the nature and future of economic growth. Next year’s Rio+20 UN Summit will surely be one of the culmination point of this growing sustainability debate.

That said, it is tragic that the strong direct connection between the world’s economic, financial and debt crises and these sustainability crises is still completely neglected by our political, economic, media and intellectual leaders. Even the most critical analysts (Stiglitz, Krugman and others) of the current muddling- through approaches to the economic crisis do not understand this interdependence of both crises’ constellations and keep reverting to “solutions” which might have worked in the past but which are unsuited for the age of the “Great Disruption”.

As long as we keep trying to solve the Eurozone crisis in isolation without understanding the nexus with the sustainability crisis and its implications for the future of Europe, the EU will sink deeper into a trust crisis and might end up as a footnote in the history books of the 22nd century.

Read also my previous posts on this need for a new vision for Europe:

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One response

  1. [...] If you look at the European crisis from this “resource and sustainability” perspective, what Europe needs is much more than the Treaty or intergovernmental agreement “quick fix” currently on the table. What is needed is no more and no less than a fundamental re-birth after a new democratic dialogue about the future vision for Europe. The main question to be answered in such a Project Phoenix is how Europe can be re-engineered in such a way that it can protect the prosperity and well-being of its citizens in a challenging time of new limits and resource constraints. For more on my Project Phoenix ideas read my previous blog posts: “Sorry Mr.Monti but Europe will need a Project Phoenix”, “Phoenix Europe: How the EU Can Emerge from the Ashes” and “New fiscal compact does not solve European Union’s existential crisis” [...]

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