MUTATION OF THE EUROPEAN CRISIS

These days European crisis is the word of the day. Scattering economies of Greece, Italy, Ireland, Spain and Portugal demand both economic and political response from the EU governments and institutions. The matter, though, is that not everyone is ready to sacrifice national sovereignty for the United Europe. Thus, economic crisis gradually mutates into a political one.

These days European crisis is the word of the day. Scattering economies of Greece, Italy, Ireland, Spain and Portugal demand both economic and political response from the EU governments and institutions. The matter, though, is that not everyone is ready to sacrifice national sovereignty for the United Europe. Thus, economic crisis gradually mutates into a political one.

Economic calamities of the United Europe have been repeatedly analyzed by seemingly each and every economics-reviewing edition. Mechanism of crisis emergence is generally clear. United currency with a single emission center for 17 countries with various economic capacities was destined to fail. The result of the financial failure brought hundred thousand people to the streets of different countries. Their indignation is boundless: it is common citizens, who are to redeem the mistakes of politicians. It is them, who will work more before retirement, pay higher taxes, wave goodbye to cheap loans (i.e. denying themselves new cars and flats), salary increases and other joys that Europeans got used to.

Two countries that constitute the backbone of the European Union — Germany and France — have assumed the burden of European leadership at this challenging time, entrusting their taxpayers with the load of responsibility for the salvation of their common home. We may hardly state that Germans or French feel particularly honored with an opportunity to save Greece, Italy and whoever comes next. This lack of joy is already reflected in public opinion polls, which predict gloomy prospects to President Sarkozy at the upcoming elections. The second wave of crisis, the political one this time, is nigh. As long as modern European leaders are hardly familiar with the works of Vladimir Lenin, I doubt that they’re aware of the fact that the helmsman of the Great October Revolution considered politics “a concentrated expression of economics”. Behold the scoff of history. Slogan that once annoyed all of us greatly, occupying— as the contemporary vocabulary defines them — “the best ad spaces”, turned out an unpleasant reality of democratic (and not a bit socialist) Europe.

It turned out that the salvation of the European economy, its financial system and, finally, its ultimate symbol — the common currency — lies within political plane. German Christian Democrats were the first Europeans to clearly articulate this thought: at the Leipzig convention on 14–15 Nov they’ve agreed on decisions that are to be implemented in order to make this salvation possible. Measures that Angela Merkel’s party has offered stipulate super-integration of the EU at a price of national sovereignties. The most remarkable thing is that small countries, which once had benefitted the most from entering the EU, now stood up with most carping criticism of such solution. Public speech of Polish Foreign Affairs Minister Radosław Sikorski before the German Foreign Policy Society on 28 Nov gave us a peculiar chance to analyze the arguments of euro-optimists and euro-skeptics. However, a couple of rubrics are necessary before we turn to our analysis.

Sikorski’s speech at the reputable German forum is especially interesting, once we remember that Poland currently presides over the EU and until 1 Jan 2012 Warsaw statements will get more attention all over Europe than they usually do. Secondly, Radosław Sikorski is a man, whose words are worth heeding. Chief of Polish foreign-policy body has a contradictive reputation at home, which he, however, had earned in the sweat of his brow. He has gone a long path from political refugee in Great Britain (having left Poland during the military situation in 1981), student of a prestige Oxford University, then a war correspondent for popular English newspapers The Spectator and The Observer in Afghanistan and Angola.

After that, he worked for Rupert Murdoch as an aide for investments into Poland and held a comfortable position in Washington, heading the “New Atlantic Initiative”, which featured close ties to the neo-conservative AEI. Sikorski is a wised-up man, capable of planning his game several steps ahead. That’s why it would do us good to analyze his statement, which caused quite a hype in Poland itself.

Polish Minister started with a thoughtful approach from 1991. Then, young journalist Sikorski was interviewing a chair of the Republican Bank of Croatia. During the interview the latter one received a phone and his interlocutor told him that Serbian parliament had authorized extra emission of the common currency of the time — dinar. The banker hung up the phone and exclaimed: “It is the end of Yugoslavia”. That was how collapse of Yugoslavia followed the collapse of “dinar zone”. Spicing his speech with quotes from Immanuel Kant, Sikorski proceeded, asking the high-flown assembly five questions:

1. Why did financial crisis take place?

2. What are our goals?

3. How can we achieve them?

4. What should Poland contribute to achieve the mutual goal?

5. What Poland asks Germany of?

The questions were the rhetorical ones, naturally. He answered them himself and yet his answers are quite debatable. Here’s the first thesis of his speech: “Expansion of the EU has triggered the growth of economy”. This conclusion rests upon the data of increasing export from Great Britain, France and Germany to the newer member-states. Englishmen, in particular, have built up their export from €2.2 billion in 1993 to €10 billion in 2010, French — from €2.7 billion to €16 billion and Germany — from €15 billion to €95 billion. Without challenging the quality of education that pan Sikorsky got in Oxford, I’d dare to ask myself — hadn’t he shirked economy lessons, if such were a part of his university training at all?

One of the reasons European crisis took place at all is hidden behind this colossal increase of import volumes by the countries with less impressive economies, who bought commodities from their mighty neighbors. Red ink of the trade balance didn’t benefit the economies of European newcomers either. Sikorski’s states that the trustee states (the term Sikorski introduced to define the main beneficiaries of the EU expansion — England, France and Germany) can now help the rest of Europe recover from economic crisis thanks to the benefits they gained from their export expansion. This thesis is especially interesting to us. Somehow, the fact that the crisis was initially triggered by the trustee states themselves was omitted from the brilliant speech of the Minister.

Here’s the second thesis of his: euro is doing well, its exchange rates against the USD and other world currencies are steady and the currency crisis is merely a consequence of rash financial policy of certain countries that lost control over the budget deficit. And once again we can’t fully agree with that. Problem of euro is rooted in unifying completely different countries with different economies within a common euro zone with a single emission center.

The answer to the second question — “What are our goals?” — followed next. Sikorski draws historical parallels between two existing federations — the USA and Switzerland. According to him, the United States of America emerged, when the federal government assumed responsibilities for the debts of certain states, which they accumulated during the Independence War. At the time the solvent Virginia negotiated with Massachusetts, which was up to its neck in debts, and the capital was established at the Potomac River. Alexander Hamilton talked everyone into signing the treaty, stipulating federal guarantees for each debtor. The Swiss Confederation appeared in a pretty much the same way after the principle rules for loaning and money transfers were agreed between the rich and the poor cantons.

Little by little, Polish Minister brought his German public towards a thought about the price of saving Europe. Then a revealing thesis followed: “Politics is an art of balancing between urgent and important. The urgent matter today is saving the euro zone and the important one — keeping Europe united as a democracy that respects the autonomy of the EU member-states. The new political order must balance between Responsibility, Solidarity and Democracy, which are the cornerstones of our political union”.