Europe – Where now? Part III

Part II – The Green Fields of France | Part III – The Weight of History | Part IV – Shifting Sands

The Weight of History

Like Robert Schuman, the politicians who formed the Governments of Europe from the 1950s to the 1980s didn’t need to visit northeastern France to be reminded of the role of war in European history. They lived through it. They had seen the armies, the tragedy, the destruction: unity, if it did nothing else than prevent people shooting each other, was an easy sell.

The European Coal and Steel Community is born is the ashes of war

The European Coal and Steel Community is born is the ashes of war

The politicians who came after them, between the 1980s and the turn of the century, may not have been as haunted by the ghosts of war as their predecessors, but they understood the context in which European unity was born, and the necessity of ensuring that living standards in Europe remained at a level that would prevent European voters from again dabbling with aggressive nationalism, or the new threat of Communism.

The free trade and structural cohesion provided by the various treaties of the European Economic Community was the bedrock on which those living standards were built. Funds flowed out of industrial economies like Germany into the peripheries, and free trade ensured that consumers in those peripheries could transfer those funds back to Germany by buying German goods and services. A virtuous circle was formed, and everybody, more of less, seemed to better off.

In the early 1990s, a new challenge arose. The former Communist states of Eastern Europe became capitalist democracies virtually overnight. Hungarians, Poles, Slovaks and East Germans, who for decades had contented themselves with living in grey apartment blocks, driving Trabants and watching black and white televisions, suddenly wanted to be consumers.

The Iron Curtain, which has been a political barrier from 1945 to 1992, had now become a line of economic demarcation. Those who lived on the west of the line were the sons and daughters of 50 years of free markets and political freedom, who wore sunglasses, drove BMWs and went on holiday to the Costa Del Sol; those on the east of the line were the sons and daughters of 50 years of economic planning and political repression, who had never been on holiday in the Costa Del Sol but who now desperately wanted to go on holiday in the Costa Del Sol.

The model of European unity, based as it was then on a set of loosely enforced economic rules, which had worked quite well for the people of western Europe, was suddenly confronted with 200m new consumers on its eastern borders, who for the moment were content with their newly discovered political freedom, but who sooner or later would start demanding their share of Europe’s riches.

Europe had to act. European economic unity was based the free movement of goods, services, capital and people, but the model was still imperfect in many ways. Enforcement of rules was patchy, and left open to interpretation in a way that could easily be manipulated by member states, causing tensions and trade distortions. Monetary policy was also hampering trade, in that fluctuating currencies and interest rates in both member states and regions was causing distortions in the flow of capital.

These deficiencies could be tolerated in the 12 member European Community that existed in 1989, but if that Community was to expand to incorporate the nation states of Eastern Europe, the number of which was increasing all the time, more structure, more enforcement and more commonality would be required.

In short, Europe would have to become both a political and economic union, because the level of economic unity required to prevent east and west getting annoyed with each other could only be achieved on the basis of pooled political sovereignty.

The Treaties of Maastricht and Amsterdam followed and by the turn of the century, Europe had itself and fully fledged political Union, with a common currency controlled by a pan-national Central Bank.

By 2004, the Treaty of Nice had permitted the accession of 10 of the former communist states of Eastern Europe to join the European Union. Further states joined in the years that followed, and in 2009 the Treaty of Lisbon made the final adjustments to the structures and institutions of the European Union to allow for collaboration between a greatly expanded number of nations states.

The challenge of the early nineties had been dealt with, painfully at times, but dealt with nonetheless.

Eastern Europeans moved west into jobs and houses in France, Germany and the UK, and went on holidays in Spain. Western companies opened offices in Krackow and Budapest, and started hiring engineering graduates from universities in Prague and Riga.

Economic unity was real. It was happening and visible on every street in every town and city. It was another miracle of European history, in a place where farmers were still ploughing up shrapnel form previous wars.

And then the debt crisis hit, and another junction had been reached.

Except this time it was different.

3 thoughts on “Europe – Where now? Part III

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